Coverage spread: 2 sources — 2 center
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AWS Growth Hits an 18-Quarter High
Amazon’s stock surged more than 9% in after-hours trading on Thursday, July 30, following second-quarter results that showed Amazon Web Services (AWS), the company’s cloud division, growing faster than at any point in more than four years. According to Fortune’s account of the earnings call, AWS generated $42.2 billion in quarterly revenue, up 37% from $30.9 billion a year earlier — its fastest growth rate in 18 quarters and, per CEO Andy Jassy, the fifth consecutive quarter of accelerating expansion. AWS added over $4.6 billion in revenue quarter over quarter, and its operating income jumped 64% to $16.6 billion, up from $10.2 billion a year prior, pushing operating margin to 39.4% from 32.9%. The unit’s backlog of future customer commitments swelled to $496 billion.
Jassy emphasized the scale of AWS’s growth by noting that on an annualized basis, the unit now runs at a $169 billion revenue rate — a figure that, standing alone, would rank 24th on the Fortune 500. He described AWS as “booming,” pointing to a steady reacceleration that began in the third quarter of 2025 at 20% growth and has climbed each quarter since to reach 37% in the most recent quarter.
Company-Wide Results and the Anthropic Effect
Across Amazon’s full business — including its retail stores, advertising, Prime subscriptions, devices, and cloud operations — net sales rose 20% year over year to $200.6 billion, up from $167.7 billion. Operating income climbed to $27.5 billion from $19.2 billion. Net income reached $62.6 billion, or $5.75 per diluted share, dramatically higher than the $18.2 billion, or $1.68 per share, reported a year earlier. Fortune notes this figure is inflated by a one-time, non-operating gain of $53.4 billion tied largely to Amazon’s investment stake in AI company Anthropic, meaning the headline profit number does not reflect ordinary operating performance alone. Advertising also continued to be a strong contributor, growing 26% year over year, an acceleration from 22% growth in the prior-year period, when the segment brought in $15.7 billion.
Free Cash Flow Turns Negative Amid AI Spending
One notable point of concern for investors, as highlighted by Fortune, is that free cash flow flipped to negative $7.6 billion, a sharp reversal from a positive $18.2 billion a year earlier. Amazon attributed this to a $66.1 billion year-over-year jump in equipment purchases tied to AI infrastructure buildout. This mirrors a broader trend among major cloud and AI companies, which collectively have pledged more than $800 billion toward data centers and AI infrastructure — a level of spending that has unsettled some investors worried about returns on such massive capital commitments.
Capex Guidance Raised to $220 Billion
Jassy told investors that Amazon now expects to spend $220 billion on capital expenditures in 2026, up from its earlier projection of $200 billion, citing higher memory costs as a driver of the increase. Despite the higher spending, Jassy said Amazon still will not have enough capacity to meet all the demand it anticipates in 2026, and he expects that same supply-demand gap to persist into 2027. AWS’s property and equipment holdings had already grown to $223 billion in the first quarter, up from $190 billion the quarter before, underscoring the pace of infrastructure investment even before the second-quarter figures were fully reported.
How the Coverage Compares
Fortune’s article, bylined around Jassy’s public remarks, provides the bulk of the substantive detail available here — the AWS growth figures, capex guidance increase, free cash flow reversal, and the Anthropic-related net income boost — framing the story as evidence that Amazon’s heavy AI infrastructure bet is beginning to pay off in cloud growth even as it strains cash flow. CNBC’s headline and framing (“Amazon soars after CEO makes the case for its massive AI investment”) align with the same core narrative — that Jassy used the earnings call to justify the scale of Amazon’s AI spending to investors — but the CNBC article text supplied here consists only of site boilerplate and does not add independent reporting detail beyond confirming the stock’s rise and the general thrust of the story. There is no indication of factual disagreement between the two outlets; rather, CNBC’s contribution is limited by the available content, while Fortune offers the fuller numerical and quotational record of the earnings call.
Why It Matters
The results matter because they offer one of the clearest signals yet that the tens of billions of dollars hyperscalers are pouring into AI data centers may be translating into accelerating cloud revenue and expanding margins, at least for Amazon’s AWS unit, rather than merely inflating costs. At the same time, the shift to negative free cash flow and the upward revision of capex guidance to $220 billion — with Jassy acknowledging that even this spending won’t satisfy demand through 2027 — highlight the financial scale and risk investors are being asked to accept as the AI infrastructure race continues. The market’s sharply positive reaction, a 9% after-hours jump, suggests investors are, for now, willing to reward the growth story despite the cash flow trade-offs.
Sources
Featured photo: Raysonho @ Open Grid Scheduler / Grid Engine via Wikimedia Commons (CC0)