Shares of Amazon slipped about 1.7% in volatile extended trading after the company signaled a wider range for near-term operating income, despite solid performance across its core businesses.
Revenue at Amazon Web Services (AWS) rose 28% year-over-year to $37.6 billion, beating Wall Street expectations of 25.1% growth and $36.6 billion in sales, according to LSEG data. The result confirms AWS’s position as the company’s primary growth and profit engine amid surging AI-related workloads.
Overall net sales climbed to $181.5 billion, reflecting steady demand across retail, advertising, and cloud services.
But the strong top-line performance was tempered by Amazon’s aggressive investment cycle. Capital expenditures reached $44.2 billion in the quarter—up more than 76% from a year earlier and above analyst expectations—as the company continues to expand data center capacity and AI infrastructure.
The spending surge comes as Big Tech collectively prepares to invest roughly $600 billion in AI this year, a scale of outlay that has raised questions about short-term returns even as demand continues to exceed supply.
In February, Amazon projected about $200 billion in annual capital expenditure, a figure that initially surprised investors. CEO Andy Jassy has since emphasized that returns will take time, writing in his shareholder letter that much of the spending “will be monetized over 2027 and 2028.”
Amazon has also moved aggressively to strengthen its position in the AI ecosystem through major partnerships. It recently expanded availability of OpenAI models and its Codex coding tool on AWS, while also deepening ties with Anthropic through a deal that includes up to $25 billion in investment and more than $100 billion in expected cloud spending over the next decade.
These agreements reinforce AWS’s role as a key infrastructure provider in the AI race and highlight how cloud platforms are increasingly competing not only on compute power but also on access to leading AI models.
Amazon said AI services running on AWS are now generating more than $15 billion in annualized revenue, a milestone that has helped bolster investor confidence and contributed to a roughly 14% gain in the company’s stock this year.
The company also issued a stronger-than-expected revenue forecast for the current quarter, projecting $194 billion to $199 billion versus analyst estimates of $188.9 billion, even after accounting for foreign exchange headwinds.
Beyond cloud and AI, Amazon’s retail and advertising businesses also showed steady momentum. Advertising revenue rose 24% year-over-year to $17.2 billion, driven by expanded placements across its ecosystem, including shopping surfaces and Prime Video content.
At the same time, Amazon continues to invest in logistics expansion, including same-day delivery coverage in more regions and a sharper focus on grocery delivery, intensifying competition with traditional retailers like Walmart and Kroger.
While AWS’s performance reinforces Amazon’s leadership in cloud computing, the company’s expanding AI ambitions—and the enormous capital required to sustain them—remain the central tension shaping investor sentiment heading into the next phase of the AI infrastructure race.