Amazon’s second-quarter results delivered exactly what investors wanted to see: net sales jumped 20% and AWS revenue surged 37% to $42 billion. The stock popped nearly 10% in after-hours trading, a clear signal that the market is rewarding cloud growth even when it comes with eye-popping infrastructure bills.
The company spent $173 billion on property and equipment over the fiscal year — a category covering GPUs, gas turbines, and land — up sharply from $107.65 billion a year earlier. And it’s not tapping the brakes. Amazon raised its 2026 capex forecast from $200 billion to $220 billion, dipping into cash reserves to cover the tab. The quarter ended with $7.6 billion less cash than a year ago, the first period of negative free cash flow this year. Normally that would spook investors. Here, it didn’t.
Why? Because AWS revenue is growing alongside all that spending. CEO Andy Jassy pointed to the years-long lag between breaking ground on a data center and selling its capacity, framing the buildout as a bet on sustained demand. He also emphasized that Amazon’s AI play isn’t just about real estate — custom silicon like the Trainium TPU and Graviton processor could meaningfully improve cloud margins over time. “There’s not going to be a single model to rule them all,” Jassy told analysts, positioning AWS as a neutral platform rather than a model shop.
But the enthusiasm has a mirror image. Microsoft and Google saw similar pops on strong cloud numbers. Meta, which lacks a comparable revenue stream to offset its own AI capex, watched its stock slide 8%. The pattern is revealing: investors are treating cloud hosts as the safest bet in the AI stack. That’s fine until you remember that Amazon’s hosting revenue is literally Anthropic’s AI bill. If demand for AI doesn’t hold up, the cloud hosts won’t be insulated — they’ll just be last in line for the reckoning.