AWS Grows 37% as Amazon Revenue Tops $200bn for First Time

Amazon has reported its first quarter with more than $200 billion in revenue, powered by a sharp acceleration at Amazon Web Services as demand for artificial intelligence infrastructure continues to reshape the company.

The company announced its second-quarter results after the US market closed on Thursday 30 July, reporting net sales of $200.6 billion for the three months to 30 June. That was up 20% from $167.7 billion a year earlier and ahead of Wall Street expectations of roughly $196 billion.

AWS was the standout. Revenue at Amazon’s cloud computing arm rose 36.7% year on year to $42.23 billion, exceeding the $40.54 billion analysts surveyed by StreetAccount had expected. It was AWS’s fastest growth in 18 quarters and its fifth consecutive quarter of accelerating expansion, following 28% growth in the first quarter.

Amazon reported diluted earnings per share of $5.75, against Wall Street forecasts of around $1.82. But the headline profit needs careful reading: net income reached $62.6 billion, while operating income was $27.5 billion. Much of the difference came from $53.4 billion in non-operating pre-tax other income, chiefly investment-related gains connected to Anthropic.

AWS becomes an even bigger profit engine

AWS generated operating income of $16.6 billion in the quarter, up from $10.2 billion a year earlier. Its operating margin was about 39%, and the division now accounts for nearly 61% of Amazon’s total operating profit.

The cloud unit’s annualised revenue run rate has reached $169 billion, according to Amazon, while its backlog stood at $496 billion and was growing at triple-digit rates. Amazon remains the largest company in cloud computing, though rivals are also reporting rapid growth: Alphabet recently said Google Cloud grew 82%, while Microsoft reported 43% growth in Azure cloud revenue during its fiscal fourth quarter.

“AWS is booming, growing 36.7% year-over-year in Q2—our fastest growth in 18 quarters—and our AI and Chips businesses each eclipsed run rates of more than $25 billion,” Amazon president and chief executive Andy Jassy said in a letter to shareholders.

Amazon’s chips business, including Trainium AI chips and Graviton processors, now has an annual revenue run rate above $25 billion, with triple-digit percentage growth year on year. Its AI revenue run rate has also passed $25 billion. Graviton5 became widely available during the quarter.

Jassy said Amazon has multiyear, multi-gigawatt commitments from Anthropic and OpenAI for Trainium. Amazon and Anthropic agreed a 10-year, $100 billion deal in April to run Anthropic’s large language models on AWS Trainium chips.

Massive spending, but still not enough capacity

Amazon is responding to the surge in demand with an even larger infrastructure build-out. Jassy said the company now expects capital spending to reach $220 billion in 2026, up from its previous $200 billion forecast because of higher memory costs.

Operating cash flow rose 33% to $161.4 billion over the trailing 12 months. However, free cash flow moved to an outflow of $7.6 billion, primarily because purchases of property and equipment increased by $66.1 billion year on year. Amazon said that increase chiefly reflected AI investment.

Even that spending will not entirely solve the immediate problem. Jassy said Amazon has so much demand that it will not slow data-centre investment, but warned that the company will still not have sufficient capacity to meet all AI demand in 2026 or 2027.

For UK businesses running cloud workloads or exploring AI projects, that is the more consequential part of the earnings report. AWS is investing heavily in capacity, chips and AI services, but companies may still encounter a market in which demand for computing resources remains ahead of supply. Amazon has not confirmed any UK pricing changes for AWS services.

AI tools and advertising add to Amazon’s reach

Amazon is also pitching a wider set of AI products to enterprises, including Kiro, its coding agent; Amazon Quick, an AI work companion; Amazon Connect for call centres; AWS Transform for software migration; and Continuum, a security vulnerability remediation service. These products are aimed at enterprise customers globally, including those in the UK.

Elsewhere, Amazon’s advertising revenue rose 26% to $19.8 billion. That gives the business increasing weight for brands selling and advertising through Amazon’s platform, including UK advertisers looking to reach shoppers through the company’s retail ecosystem.

North America revenue rose 16% to $116.2 billion, while international sales increased 15% to $42.2 billion. Amazon also said Prime delivery speeds hit records in the first half of the year, with more than 40% more items delivered same-day or overnight, though the cited delivery data was US-centric.

What comes next

For the third quarter, Amazon expects net sales of between $197 billion and $202 billion, with operating income forecast at $22.5 billion to $26.5 billion. The company said comparisons will be tougher because it moved this year’s Prime Day discount event into June rather than its usual July slot. Excluding the effect of this year’s and last year’s Prime Day timing, Amazon said third-quarter growth would be nearly 400 basis points higher.

Investors welcomed the results, sending Amazon shares up 9.15% in after-hours trading to $257.04 after the stock closed at $235.50. The immediate market reaction reflects confidence in AWS, but the next test will be whether Amazon can keep converting exceptional AI demand into cloud revenue while building infrastructure quickly enough to serve it.