Amazon’s strong second-quarter results boosted investor confidence in its AI strategy, largely because expanding cloud revenue appears to support its heavy spending on data centres. The reaction highlights that markets currently favour companies which earn clear revenue from hosting AI workloads, while remaining wary of firms investing heavily without an equally visible return.

Amazon’s net sales rose 20%, AWS revenue increased 37% year on year to $42 billion, and its shares rose nearly 10% in after-hours trading. However, it spent $173 billion on property and equipment in the year to June and lifted its 2026 capital-expenditure forecast to $220 billion, despite lower cash and negative free cash flow; similar cloud-led optimism has benefited Microsoft and Google, whereas Meta’s shares fell 8% amid concerns over spending. The article cautions that cloud-hosting revenue ultimately depends on sustained demand from AI developers and their customers.