Amazon Accelerates as AWS Posts Fastest Growth in 18 Quarters

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• AMZN

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Amazon.com Inc. (AMZN), the online retailer and cloud-computing provider, accelerated its growth as AWS sales rose 37%, the cloud unit’s fastest expansion in 18 quarters [1][2][3].

The cloud rebound accompanied stronger retail growth. Second-quarter net sales rose 20% from a year earlier, accelerating from 17% in the first quarter, while currency-neutral growth quickened to 20% from 15% [1][3]. Online-stores growth excluding currency accelerated to 15% from 9%, and third-party seller-services growth increased to 16% from 12% [2].

Revenue reached $200.6 billion, compared with $181.5 billion in the first quarter. Net income more than doubled sequentially to $62.6 billion, or $5.75 a diluted share, from $30.3 billion, or $2.78 a share. The increase largely reflected $53.4 billion of pre-tax income tied primarily to Amazon’s Anthropic investments, up from $16.8 billion [1][4][3].

AWS sales climbed to $42.2 billion from $37.6 billion in the first quarter, while operating income rose to $16.6 billion from $14.2 billion. The segment’s operating margin expanded to 39.4% from 37.7% [1][2][3]. Its chips business and AWS AI business each exceeded a $25 billion annual revenue run rate, with both growing at triple-digit rates [5][3][6].

Growth also strengthened in Amazon’s largest retail market. North America sales rose 16%, accelerating from 12% in the prior quarter, while operating income increased to $9.1 billion from $8.3 billion [1][7][3]. International currency-neutral growth accelerated to 15% from 11%, and the segment’s operating margin widened to 4.1% from 3.6% [1][7][3].

Amazon Now gross sales and units increased more than 80% sequentially after the rapid-delivery service expanded to more than 250 cities and towns globally. The number of customers served increased more than 60% [8][9].

For the third quarter, Amazon expects sales of $197 billion to $202 billion, representing growth of 9% to 12%, and operating income of $22.5 billion to $26.5 billion, compared with $17.4 billion a year earlier. The shift in Prime Day timing reduced the projected sales-growth rate by nearly four percentage points [10].

The expansion required heavier spending. Trailing-12-month operating cash flow rose 33% to $161.4 billion, while free cash flow swung to a $7.6 billion outflow from a $1.2 billion inflow in the first quarter as property-and-equipment purchases climbed to $169.0 billion. The increase was primarily due to AI investment [1][11][3].

Citations

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