Amazon jumps nearly 9% as cloud and advertising growth drive earnings beat

Amazon shares surged nearly 9% in after hours trading after the company reported stronger than expected second quarter results, driven by accelerating cloud and artificial intelligence demand.

Amazon reported net sales of $200.6 billion, up 20% from $167.7 billion a year earlier. Operating income rose 43% to $27.5 billion from $19.2 billion.

Amazon Web Services generated $42.2 billion in revenue, up 37% from the previous year and marking its fastest growth in 18 quarters. The result exceeded analysts’ expectations of approximately $40.5 billion and growth of around 31%.

AWS operating income climbed 64% to $16.6 billion, giving the cloud division an operating margin of 39.4%. AWS accounted for about 21% of Amazon’s total revenue but generated more than 60% of its operating income during the quarter.

Amazon said its AWS artificial intelligence business and custom chip business each surpassed annual revenue run rates of $25 billion, with both growing at triple digit rates.

The company highlighted multiyear computing commitments from Anthropic and OpenAI for its Trainium chips, alongside growing adoption from companies including Uber and Pinterest.

Advertising revenue increased 26% to $19.8 billion, while online store sales rose 15% to $70.4 billion. Third party seller services grew 16% to $46.8 billion.

Net income increased to $62.6 billion, or $5.75 per diluted share, compared with $18.2 billion, or $1.68 per share, a year earlier.

The result included $53.4 billion in non operating income primarily linked to Amazon’s investment in Anthropic. Excluding that gain, operating performance provides a clearer measure of growth in Amazon’s underlying businesses.

Amazon’s trailing 12 month operating cash flow rose 33% to $161.4 billion. However, free cash flow shifted to an outflow of $7.6 billion from an inflow of $18.2 billion a year earlier as investments in property and equipment increased sharply.

The company attributed the decline primarily to an additional $66.1 billion in infrastructure spending related to artificial intelligence.

For the third quarter, Amazon expects revenue between $197 billion and $202 billion, representing annual growth of 9% to 12%. Operating income is projected between $22.5 billion and $26.5 billion, compared with $17.4 billion a year earlier.

Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.