tech
Investors love AI, as long as you’re a cloud host
Amazon isn't slowing down on data center spending — but investors don't seem to mind.
TL;DR
- Amazon reported strong second-quarter earnings with net sales up 20%, exceeding expectations.
- Cloud revenue (AWS) was a standout, growing 37% year-over-year to $42 billion.
- Amazon significantly increased spending on property and equipment, reaching $173 billion for the fiscal year ended June 30.
- The company raised its 2026 capex forecast to $220 billion and experienced negative free cash flow for the first time this year.
- Despite high spending, investors are positive due to strong AWS demand, seeing cloud hosting as a reliable part of the AI stack.
- Amazon is also investing in AI chips like Trainium TPU and Arm-based Graviton processors to improve cloud business margins.
- The article contrasts Amazon's success with Meta's struggles, highlighting investor skepticism towards companies with high capex and unclear revenue from AI.