Amazon beats estimates for cloud revenue growth on back of surging enterprise AI spending
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Amazon Web Services revenue jumped 37% to $42.2B in Q2 ended June 30, beating the 31.21% analyst consensus per LSEG and marking its fastest growth in 18 quarters per CEO Andy Jassy
- Amazon raised its 2025 capital expenditure outlook to $220B, a 10% increase from its prior forecast, with Jassy citing memory chip costs and warning that even that figure 'will still not have enough capacity to meet all of the demand we have in 2026' and 2027
- Amazon's free cash flow swung sharply negative, burning $7.6B on a trailing 12-month basis in Q2 versus $18.2B in free cash flow a year earlier — a pattern mirrored at Microsoft, Alphabet, and Meta as they ramp AI spending
- AWS AI and chips businesses each eclipsed run rates of more than $25B, with its annual AI revenue run rate surpassing $15B and growing at a triple-digit percentage range
- AWS secured major cloud infrastructure and chip supply partnerships this year with OpenAI, Anthropic, Meta, Pinterest, and Snowflake
- Amazon's ad sales rose 26% year-over-year to $19.8B in the quarter, while Prime Day (June 23–26) drove estimated consumer spending over $26.4B per Adobe Analytics
- Shares in Amazon jumped more than 9% after the market's close before easing to roughly 8% higher, following a 3.9% rise during the trading session
Why it matters: Big Tech AI spending now exceeds $700B annually, straining balance sheets across Amazon, Microsoft, Alphabet, and Meta. Amazon's free cash flow collapsed from +$18.2B to -$7.6B in a year, yet Jassy signaled even the $220B capex bump still won't satisfy 2026 demand — investors are effectively underwriting years of cash burn on the bet that the AI backlog keeps growing.
