Amazon.com Inc. shares rose more than 9% in after-hours trading Thursday, a relief rally that followed a second-quarter report showing the company’s cloud unit growing faster than Wall Street expected and profit more than tripling.
Revenue climbed 20% from a year earlier to $200.61 billion. Net income reached $62.65 billion, up 245%, and earnings came to $5.75 a share, ahead of the $4.90 analysts had projected, according to FactSet. Profit got a boost from the company’s investment portfolio, which has swung sharply in recent quarters with the value of its stakes in AI startups.
The engine was AWS. The cloud division generated $42.2 billion in revenue, up 37%, beating the $40.6 billion analysts expected. Operating profit at AWS rose 64% to $16.6 billion, lifting the unit’s operating margin to 39.4%, its highest level since Amazon began breaking out the figure in 2015.
The acceleration marks a shift from a year ago, when AWS growth had cooled into the teens and investors questioned whether the unit that built the modern cloud industry had lost its edge. Amazon responded by cutting costs, pushing its own AI chips, and leaning into the surge in demand for computing power to train and run large language models. The result is visible in the margin: AWS is now more profitable per dollar of revenue than at any point in its history, even as Amazon pours money into data centers at a record pace.
The company also raised its full-year capital spending target to $220 billion from $200 billion, an acknowledgment that the artificial-intelligence buildout is consuming cash faster than planned. Amazon has committed roughly $40 billion in total to OpenAI and Anthropic, the two startups racing to build frontier AI models, according to people familiar with the matter and company disclosures. Much of that money flows back to Amazon in the form of computing purchased through AWS, a circular arrangement that lets the company profit from AI demand no matter which lab’s models win.
The spending plan came with a note of caution. Amazon guided third-quarter revenue to a range whose midpoint sat slightly below the average analyst estimate, and growth in its retail business has slowed for several quarters. Investors chose to focus on the cloud instead, and the stock’s after-hours gain showed which part of the report carried the day.
That focus is easy to understand after July. The selloff that wiped trillions from technology valuations had left shareholders bracing for the first cracks in the AI spending story. Amazon’s numbers pushed back: AWS grew 37% while improving margins, evidence that the capacity being built at enormous cost is finding buyers.
The margin is the number executives and analysts will parse in the coming weeks. At 39.4%, AWS operating margin has widened by several points over the past year even as Amazon accelerated data-center construction across Virginia, Ohio and Oregon, among other states. Analysts said the combination of growth and margin shows Amazon can absorb its spending plan without destroying returns, a claim investors have been testing across the industry all summer.
The $220 billion figure also feeds the debate over whether the four biggest spenders, Amazon, Microsoft, Alphabet and Meta, can ever earn their money back. Amazon’s answer, at least for now, is that the cloud business sells the very infrastructure the company is building, so capital spending and revenue growth move together. Its rivals can point to similar logic, but few can match the margin AWS earns on each dollar of that infrastructure.
The OpenAI and Anthropic ties complicate the picture. Amazon has invested in both companies and provides much of their cloud capacity, a web of relationships that lets it profit from AI demand across the industry. People familiar with the arrangements say the stakes were structured as computing credits as much as cash, tying the startups to AWS over time. That structure means Amazon’s AI bets are not simply venture investments; they are customer-acquisition costs for the most important workload of the decade.
What remains open is the pace. Amazon’s $220 billion plan for 2026 exceeds what any company has spent on infrastructure in a single year, and the third-quarter guidance suggests growth in the overall business is settling into the high teens rather than accelerating. The company’s own chip efforts, which aim to reduce its dependence on Nvidia for AI computing, could shift the cost picture in coming years, though executives have said little about how quickly those chips will scale.
For investors, the quarter offered a clear trade: cloud strength justifies the spending, and the stock rose on it. The next test comes in October, when Amazon reports whether the fourth quarter, and the first full year of $200 billion-plus spending, delivers the same answer. If AWS keeps growing at this pace, the company’s biggest bet will keep paying off. If the cloud slows, the largest capital program in corporate history will come under the kind of scrutiny July taught the market to apply.
