Amazon profits surge 35% but share price falls as forecast sinks

Amazon AI Momentum Fuels Q2 Profit Surge

Amazon announced a 35 % jump in quarterly earnings, signaling that its significant investments in artificial intelligence are producing tangible results.

Second‑Quarter Highlights

• Net profit climbed to $18.2 B from $13.5 B a year earlier.
• Net sales rose 13 % to $167.7 B, exceeding analyst forecasts.
• Alexa+ and AI shopping agents are expanding customer engagement.

Cloud Computing Booster

Amazon Web Services (AWS) led the charge:

• Sales surged 17.5 % to $30.9 B.
• Operating profit grew to $10.2 B from $9.3 B last year.

Cash Flow and Capital Allocation

• Free cash flow fell sharply to $18.2 B, down from $53 B a year earlier.
• Capital spending on AI infrastructure and logistics reached $32.2 B, nearly double the $17.6 B spent last year.
• Amazon will spend up to $100 B this year, largely on AI‑related investments for AWS.

Current‑Quarter Outlook

• Net sales forecast between $174.0 B and $179.5 B, 10‑13 % growth.
• Operating profit range of $15.5 B to $20.5 B, reflecting caution amid trade negotiations and AI competition.

Investor Sentiment

Despite the stellar second quarter, Amazon’s share price slipped about six % in after‑hours trading, driven by concerns that AI costs are eroding margins.

Emarketer analyst Sky Canaves noted that “there’s still potential for curveballs from ongoing trade negotiations and accelerating competition on the AI front.”