Amazon Q2 Earnings Beat Estimates as AWS AI Growth Surges, But Q3 Revenue Forecast Disappoints

Amazon exceeded Wall Street expectations for second-quarter revenue, driven by rapid growth in its cloud computing business and rising demand for artificial intelligence services. However, the company's weaker-than-expected third-quarter sales forecast tempered investor enthusiasm despite shares jumping nearly 10% in after-hours trading.

For the quarter ended June 30, Amazon reported revenue of $200.6 billion, surpassing analysts' consensus estimate of $196.16 billion. The company also posted earnings per share of $5.75, although the figure was boosted by a significant one-time investment gain, making it difficult to compare directly with market expectations.

Second-quarter net income included $53.4 billion in non-operating pre-tax income, primarily tied to Amazon's investment in AI startup Anthropic.

Amazon continued to increase spending on artificial intelligence infrastructure, with trailing 12-month capital expenditures climbing to $173 billion. The company said the surge in property and equipment purchases was largely driven by investments aimed at expanding AI capabilities and cloud infrastructure.

The heavy investment appears to be paying off. Amazon Web Services (AWS) generated $42.2 billion in revenue during the quarter, up 37% year over year and marking its strongest growth in 18 quarters as businesses accelerated AI adoption and expanded cloud workloads.

Despite the strong performance, Amazon issued a cautious outlook for the current quarter. The company forecast third-quarter revenue between $197 billion and $202 billion, below analysts' expectations of $203.9 billion. Amazon expects operating income to range from $22.5 billion to $26.5 billion, compared with $17.4 billion in the same period last year.

Chief Executive Officer Andy Jassy said both AWS' AI business and Amazon's custom chip division surpassed $25 billion in annual revenue run rates during the quarter. He also highlighted continued momentum in the company's advertising business, where revenue increased 26%, while Prime delivery speeds reached record levels during the first half of the year.

The results reinforce Amazon's strategy of aggressively investing in AI infrastructure to support long-term cloud growth, even as elevated capital spending continues to pressure free cash flow.