Booming AWS Revenue Shields Amazon From Meta-Sized Backlash

In an earnings call key to soothing skittish investors, the world’s biggest company by revenue arrived with its head in the clouds. And that was just fine by Wall Street.

Shares of Amazon jumped as much as 9% in after-hours trading Thursday after second-quarter earnings results that included rip-roaring cloud revenue, demonstrating the world still can’t get enough compute. Investors took it as a sign that generating a return on enormous artificial intelligence investments is possible, which is more than can be said about some fellow hyperscalers.

Tipping of the Hyperscales

Jittery investors are finally starting to get an idea of what they do and do not like to see from Big Tech hyperscalers. Meta plummeted nearly 8% on Thursday following its after-the-bell earnings call the day before, in which executives increased the lower end of its capex forecast even as AI spending was already eating into its free cash flow. Microsoft, on the other hand, had its best trading day since 2008 on Thursday: Shares of the Windows-maker jumped more than 15% after it held capex guidance steady on Wednesday and reported that demand for AI compute pushed annual revenue for its Azure cloud business past $100 billion for the first time ever in fiscal 2026, which ended in June.

The reaction to Amazon’s results was considerably closer to investors’ reception of Microsoft’s performance than to Meta’s. CEO Andy Jassy hiked the company’s capex guidance about 10% to $220 billion. That’s more than both Meta and Microsoft, and roughly on par with Google’s recently increased capex guidance (which scared Wall Street last week). But investors, for now, saw enough from a booming cloud business and signs that the AI bet is actually paying off to stay upbeat:

• Revenue for Amazon Web Services, the largest cloud provider in the world, jumped 37% year over year to $42.2 billion. That’s the fifth straight quarter of acceleraeting AWS growth, and the fastest growth rate in 18 quarters.
• Meanwhile, Amazon said both AWS’s AI business and the company’s burgeoning in-house chips business surpassed $25 billion annual run rates in the quarter, with both marking triple-digit growth rates year over year. 

Trainium Wheels: In fact, founder Jeff Bezos has recently touted the AI chips business as a future “pillar” for the company. Anthropic and OpenAI have both signed on to use the company’s in-house Trainium chips, while revenue commitments for its recently launched next-gen Graviton chips nearly tripled quarter-over-quarter. In the meantime, Amazon has quietly shuttered its Artificial General Intelligence lab and is winding down work on its flagship Nova AI model, according to a Business Insider report (though it is developing a new frontier model expected to debut this fall). If you can’t beat the frontier AI model peers, you can always supply chips to them. Oh, and toilet paper and sticky notes and whatever else they might need.