Amazon's Q2 Soars on AI and Cloud Power, Advertising Revenue Hits Nearly $20 Billion

Amazon just blew past Wall Street predictions with a massive second quarter, announcing its first-ever $200 billion revenue quarter. The tech giant's success was largely fueled by booming growth in its cloud computing division, Amazon Web Services (AWS), and a sharp rise in advertising earnings, sending shares up significantly in after-hours trading. The company's focus on artificial intelligence (AI) proved a major catalyst, with both its AI and Chips businesses now hitting over $25 billion in annual revenue each. The driving force behind this impressive performance is clearly the massive demand for AI infrastructure, a trend Amazon CEO Andy Jassy highlighted by noting that AWS 37% revenue jump was its fastest in over four years, reaching $42.2 billion for the quarter. Jassy even warned that Amazon won't have enough capacity to meet AI demand through 2027, and possibly into 2028, despite a hefty increase in its 2026 capital expenditure outlook to $220 billion, mainly for AI infrastructure. A significant $53.4 billion gain from its investment in AI startup Anthropic also heavily boosted Amazon net income to $62.6 billion. Looking ahead, Amazon aggressive investment in AI is a double-edged sword: while it drives huge growth in AWS and advertising, it has led to a negative free cash flow in the short term as the company builds out its data centers. The company is also refining its internal AI strategy, reportedly scaling back some homegrown 'Nova' AI models to focus on more advanced 'frontier models' and strengthening its core AI infrastructure offerings. This pivot signals Amazon determination to dominate the AI economy, even as it navigates intense competition and massive spending to keep up with demand.