Amazon AI spending rises as AWS growth lifts shares after Q2 earnings
Amazon shares jumped after Q2 results as investors looked past higher AI capex and focused on AWS revenue growth.
By Jordan Bell · Startups & Deals Reporter
· 3 min read
Amazon AI spending is still climbing, but investors gave the company room to keep building after a strong second-quarter report. Amazon said Thursday that net sales rose 20%, while AWS, its cloud division, grew fast enough to help send the stock up nearly 10% in after-hours trading.
The market reaction shows how differently investors are treating AI infrastructure depending on who is spending the money. For Amazon, the costs are tied to a cloud business that sells computing power to other companies. For everyday investors, that distinction matters: AI spending can look less risky when it is paired with visible revenue growth.
Why did Amazon stock rise after AI spending increased?
Investors appeared to focus on Amazon’s cloud momentum. AWS revenue rose 37% from a year earlier to $42 billion for the quarter, according to the company’s results, giving Wall Street a revenue line to compare against the company’s spending on data centers and related infrastructure.
Capital expenditures, often shortened to capex, are long-term investments in assets such as buildings, equipment and infrastructure. Amazon’s spending on property and equipment reached $173 billion for the fiscal year ended June 30, up from $107.65 billion a year earlier. That category covers items such as GPUs, natural gas turbines and land, according to TechCrunch.
Amazon also increased its 2026 capex outlook to $220 billion from $200 billion. The company has started using cash reserves to help fund the buildout, and it ended the quarter with $7.6 billion less cash than it had 12 months earlier. TechCrunch reported that this marked Amazon’s first period of negative free cash flow this year. Free cash flow is the cash a company has left after paying for operations and capital investments.
The trade-off is timing. Data centers can take years to move from construction to usable capacity, so cloud providers spend long before they can sell the finished computing power. Amazon’s AWS growth suggests demand is rising while the company adds supply, which can make the spending easier for investors to accept.
Amazon CEO Andy Jassy also pointed to cloud margins and AI tools on the company’s earnings call. “We see the AI business following very much the same margin trajectory we saw in the core business before,” Jassy said. He added that “AWS and Amazon Bedrock can have a wildly successful business without its own frontier model,” saying there would not be “a single model to rule them all.”
Amazon is also investing beyond data centers. TechCrunch reported that the company is working on chips including Trainium and the Arm-based Graviton processor. Those efforts do not appear in capex in the same way as property and equipment, but they can affect profitability in AWS if they lower the cost of delivering cloud services.
Cloud revenue is shaping the AI spending debate
Amazon is not the only large tech company getting credit for AI spending backed by cloud sales. TechCrunch reported similar investor reactions after Microsoft and Google posted strong cloud revenue, with both companies’ shares rising after results.
Meta has faced a different response. TechCrunch reported that Meta’s stock fell 8% after earnings this week as investors focused on cash flow pressure and continued spending. The contrast is straightforward: investors have been more patient with AI infrastructure spending when the company already sells cloud capacity to outside customers.
That does not remove the bigger question for Amazon, Microsoft or Google. Cloud revenue from AI ultimately depends on whether AI labs, startups and business customers keep paying for computing power. If demand weakens, today’s cloud growth could become harder to sustain.
This story draws on original reporting from TechCrunch.
