Amazon released its second quarter earnings on Thursday after the market closed. The results beat analyst expectations on both revenue and profit.
Shares rose sharply after the report. Amazon stock climbed more than 9% in after hours trading Thursday and jumped roughly 13% in premarket trading Friday.
The company posted earnings per share of $5.75. Analysts had expected earnings closer to $1.82 per share.
Revenue for the quarter came in at $200.6 billion. That topped analyst forecasts of about $197 billion.
AWS Cloud Business Leads Growth
Amazon's cloud computing division, AWS, was the biggest driver of the strong results. AWS revenue grew 37% year over year during the April to June period.
That marked the fastest growth rate for AWS in 18 quarters. It was also faster than the 28% growth AWS posted in the previous quarter.
AWS brought in $42.2 billion in sales for the quarter. That beat expectations of $40.5 billion.
CEO Andy Jassy said AWS is "booming." He said the unit's AI and chip businesses each passed annual run rates of more than $25 billion.
Advertising also had a strong quarter, growing 26% year over year. North American net sales climbed to $116.1 billion.
Capital Spending Rises to $220 Billion
Jassy told investors that Amazon now plans to spend $220 billion this year on capital projects. That is up from the $200 billion plan announced in February.
Most of the spending covers artificial intelligence infrastructure. It also includes robotics, semiconductors, and satellites.
Jassy said the higher cost of memory chips was the main reason for the increase. He said Amazon still will not have enough capacity to meet demand this year.
"I believe this dynamic will also be true in 2027 too," Jassy said. He added that demand for 2028 is already strong.
Free cash flow fell to negative $7.6 billion during the quarter. That was a 142% decline from a year earlier as spending on AI infrastructure increased.
Amazon's report followed earnings from other major tech companies covering the same period. Microsoft reported strong results on Wednesday, and its stock jumped as much as 15% Thursday.
Meta's stock fell as much as 9% after the company did not give capital spending guidance for 2027. Alphabet also saw its stock fall last week after raising its spending forecast to as much as $205 billion.
Amazon has also expanded its chip business, renting out computing capacity to companies including Meta, OpenAI, and Anthropic. Jassy has previously discussed the idea of selling Amazon's chips directly to customers for their own data centers.
Amazon also highlighted growth in its retail operations. The company said delivery speeds hit new records for Prime members during the first half of the year, with over 40% more items delivered same-day or overnight.
Online pharmacy orders more than doubled in the same period, and same-day prescription deliveries rose nearly five times.
For the current quarter, Amazon expects net sales between $197 billion and $202 billion. Analysts had been expecting $203.9 billion, according to FactSet.
Net income for the quarter totaled $62.65 billion, compared with $18.16 billion a year earlier.
