Amazon's earnings report reshapes the debate on AI spending: Strong returns support massive investments

Amazon's second-quarter earnings report provides new arguments for the debate surrounding massive investments in AI infrastructure, backed by strong performance. The report shows that its cloud computing division, AWS, saw revenue growth of 36.7% year-over-year to $42.2 billion, marking the fastest growth rate in 18 quarters. The company's total net sales reached $200.6 billion, a 20% increase year-over-year, with operating profit hitting $27.5 billion, up 43% year-over-year.

A pre-tax non-operating gain of $53.4 billion from investment by Anthropic propelled Amazon's net profit for the quarter to $62.6 billion, with diluted earnings per share reaching $5.75. More importantly, its AI business and self-developed chip business both exceeded an annualized revenue of $25 billion, with growth in triple digits.

Despite high capital expenditures leading to a negative free cash flow of $7.6 billion over the past twelve months, investors reacted positively this time, with the stock price rising by as much as 8% in after-hours trading. Morningstar analysts noted that the accelerated growth of AWS clearly supports management's large-scale capital investment plans.

Amazon CEO Andy Jassy stated that the growth rate of AWS in the second quarter was the fastest in 18 quarters, with strong growth in AI and chip businesses, and the advertising business also recorded a 26% year-over-year increase. This performance indicates that Wall Street is beginning to reassess the value-return logic of AI investments