Amazon exceeded Wall Street expectations for cloud computing growth in the second quarter and raised its annual capital expenditure forecast, signalling that strong demand for artificial intelligence services continues to support its aggressive infrastructure investment.
Shares of the Seattle-based technology and e-commerce giant jumped more than 9% in after-hours trading before easing to trade about 8% higher, following a 3.9% gain during the regular session.
The company reported earnings per share of $5.75, well above expectations of $1.82. Revenue came in at $200.61 billion, ahead of the consensus estimate of $197.03 billion.
Revenue from Amazon Web Services (AWS) climbed 37% to $42.2 billion in the quarter ended 30 June, comfortably exceeding analysts' expectations for growth of 31.21%.
“AWS is booming, growing 36.7% year-over-year in Q2—our fastest growth in 18 quarters—and our AI and Chips businesses each eclipsed run rates of more than $25 billion,” said Andy Jassy, President and CEO, Amazon. “In Stores, we again set record delivery speeds for Prime members in the first half of the year—over 40% more items delivered same-day or overnight, with Grocery and Everyday Essentials growing meaningfully faster than the rest of the business. And, Advertising had another strong quarter with 26% year-over-year growth."
Jassy said Amazon now expects capital expenditure to reach US$220 billion this year, up 10% from its previous forecast, with higher memory chip costs contributing to the increase.
Despite the strong revenue growth, Amazon's free cash flow deteriorated sharply. The company reported negative trailing 12-month free cash flow of $7.6 billion in the second quarter, compared with positive free cash flow of $18.2 billion a year earlier.
The result reflects a broader trend across the technology sector, with Microsoft, Alphabet and Meta Platforms also reporting significant declines in free cash flow as they continue ramping up AI-related investment.
Even so, Amazon's results reinforced the strength of the cloud computing market, following similarly robust performances from Microsoft and Alphabet, both of which comfortably exceeded Wall Street expectations for cloud revenue growth.
Amazon closed the session with a market capitalisation of approximately US$2.53 trillion.
