Amazon surpassed $200 billion in quarterly revenue for the first time, powered by rapid growth in its cloud and artificial intelligence (AI) businesses. Cash flow worsened because of large-scale AI infrastructure investments, but the market focused on its growth potential.
Amazon said on the 30th (local time) that second-quarter revenue rose 20% from a year earlier to $206.1 billion. The results beat the market forecast of $196.5 billion. Operating income also climbed 43% to $27.5 billion.
The driver of growth was the cloud institutional sector, Amazon Web Services (AWS). AWS revenue rose 36.7% to $42.2 billion, the highest growth rate in 18 quarters. AWS's AI business and its in-house designed semiconductor business each exceeded an annualized $25 billion in revenue. North America and international retail sales also grew 15%–16% each, and advertising revenue increased 26%.
Net income swelled to $62.6 billion, helped by valuation gains from its Anthropic investment and other factors. Earnings per share were $5.75, far above the market estimate of $1.82.
To meet AI demand, Amazon raised this year's capital expenditure outlook to $220 billion from $200 billion. Free cash flow over the past 12 months swung to a $7.6 billion deficit because of increased investment. Chief Executive Andy Jassy suggested the possibility of additional investment, noting that spending on data centers and servers converts to revenue soon after they come online.
The third-quarter revenue outlook of $197 billion–$202 billion fell short of market expectations, but the stock rose 3.9% in regular trading and gained an additional 9.5% after-hours.