Investors love AI, as long as you’re a cloud host
Amazon reported strong second-quarter earnings driven by significant growth in its cloud division, AWS. Despite concerns over high capital expenditure on data centers and AI infrastructure, investors responded positively to the company's long-term growth strategy.
Why it matters
It highlights the massive capital investment required to lead in the AI race and how cloud providers are justifying these costs to shareholders.
Amazon reported better-than-expected second-quarter earnings on Thursday, and investors loved what they saw. Net sales rose 20%, and cloud revenue stood out as a particular bright spot. This combination of positive results was enough to send Amazon’s stock up nearly 10% in after-hours trading.
Crucially, Amazon isn’t slowing down on data center spending, despite the conventional wisdom that investors want companies to rein it in.
One line item, in particular, illustrates Amazon’s appetite for investing in infrastructure. Amazon spent $173 billion for the fiscal year ended June 30 on property and equipment — a category that covers GPUs, natural gas turbines, and plots of land — up from $107.65 billion from the year before
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