Amazon Expands AI Investment After AWS Records 37 Perecnt Growth
Amazon announced it will boost this year’s capital expenditures on technology, primarily artificial intelligence, by an extra 10percent following the strong profits and net sales reported for the fiscal second quarter, driven by rapid growth in its leading cloud computing division.
The company from Seattle announced on Thursday that its cloud computing division, known as AWS, experienced a 37percent increase in sales during the April-June timeframe, exceeding the 28percent growth seen in the prior quarter and reaching the highest growth rate in 18 quarters.
CEO and President Andy Jassy informed investors during the call that Amazon anticipates capital expenditures will reach $220 billion, encompassing investments in robots, semiconductors, and satellites. That's an increase from the $200 billion investment strategy revealed in February and significantly higher than the $128 billion in total capital expenditures for the entirety of last year. Jassy pointed to the elevated price of memory chips as the primary cause for the rise.
Assy informed investors that even with the $220 billion figure, Amazon will still lack sufficient capacity to satisfy all the demand it faces this year.
“I think this dynamic will hold true in 2027 as well,” he noted. "The interest we currently see for 2028 is remarkable."
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Nonetheless, stocks increased by over 9percent in after-hours trading.
Investors had been attentively monitoring Amazon’s quarterly earnings to determine if the company's substantial investment in AI is beginning to yield results.
The company from Seattle provided a careful sales forecast for the ongoing quarter.
Amazon was one of the final tech giants to disclose its earnings results for the most recent three-month period. The reports provide investors with insights into AI expenditure and the expansion of cloud computing throughout the sector.
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Last week, Alphabet, Google's parent company, announced revenue for the second quarter that surpassed expectations, driven by an 82percent growth in its cloud sector. However, the shares dropped as the technology leader raised its full-year outlook for capital expenses to between $195 billion and $205 billion. That’s an increase from the earlier estimate of $180 billion to $190 billion.
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Microsoft reported on Wednesday a stronger profit for the most recent quarter than analysts had anticipated, noting robust growth for its Azure cloud division. The company did not reveal a significant rise in its planned spending on AI investments. That contributed to raising share prices.