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3 hours ago - Business
Amazon revenue soars as AI investments pay off
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Illustration: Lindsey Bailey/Axios
Amazon's AI cloud business soared in the second quarter, driving far higher revenue than expected, though the company's free cash flow also turned negative as it invests heavily in the business.
- Amazon shares surged 9.4% in after-hours trading.
Why it matters: The surging AI economy — centered around cloud companies like Amazon, hyperscalers and data center investments — is booming, even as questions are mounting about whether it's sustainable.
Driving the news: Amazon delivered a 20% increase in net sales to $200.6 billion, easily topping S&P Capital IQ expectations of $196.4 billion.
- Much of the gain came from a triple-digit growth in Amazon Web Services' AI business and triple-digit growth in its chips business — both of which now represent an annualized revenue rate of $25 billion.
Zoom in: Amazon's North America sales rose 16%, international sales increased 15%, and AWS sales jumped 37%.
- The company recorded net income of $62.6 billion, with $53.4 billion of that attributable to pre-tax gains stemming primarily from the company's investment in Claude maker Anthropic.
- "The strong showing from the world's No. 1 cloud services provider mirrors solid performances from smaller rivals Microsoft and Alphabet's Google, both of which comfortably beat Wall Street estimates for cloud revenue," Reuters noted.
Yes, but: Amazon's free cash flow in the 12-month period ended June 30 amounted to an outflow of $7.6 billion, down from an inflow of $18.2 billion in the comparable period a year earlier.
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