Madison Malone discusses the inner workings of the Amazon AI chip lab featured in the latest Markets with Madison episode. Video / Herald NOW
Amazon has reported a 35% rise in quarterly profits, saying big investments in artificial intelligence are starting to pay off.
The Seattle-based company posted net profit of US$18.2 billion ($30.9 billion) for the second quarter that ended June 30, compared with US$13.5b in the corresponding period last year.
Net salesclimbed 13% to US$167.7b, beating analyst expectations and signalling that Amazon was surviving the impacts of US President Donald Trump’s high-tariff trade policy.
“Our conviction that AI will change every customer experience is starting to play out,” said chief executive Andy Jassy, pointing to the company’s expanded Alexa+ service and new AI shopping agents.
Amazon Web Services (AWS), the company’s cloud computing division, led the charge with sales rising 17.5% to US$30.9b.
The unit’s operating profit rose to US$10.2b from US$9.3b a year earlier.
The strong AWS performance reflects surging demand for cloud infrastructure to power AI applications, a trend that has benefited big cloud providers as companies race to adopt generative AI technologies.
Amazon Web Services led with a 17.5% sales jump, boosting operating profit. Photo / Getty Images
Despite the stellar results, investors seemed worried about Amazon’s big cash outlays to pursue its AI ambitions, sending its share price more than 3% lower in after-hours trading.
The company’s free cashflow declined sharply to US$18.2b for the trailing 12 months, down from US$53b in the same period last year, as Amazon ramped up capital spending on AI infrastructure and logistics.
It spent US$32.2b on property and equipment in the quarter, nearly double the US$17.6b spent a year earlier, reflecting massive investments in data centres and backroom capabilities.
Amazon has pledged to spend up to US$100b this year, largely on AI-related investments for AWS.
For the current quarter, Amazon forecasts net sales between US$174b and US$179.5b, representing solid growth of 10-13% compared with the third quarter of 2024.
Operating profit was expected to range from US$15.5b to US$20.5b in the current third quarter, which was lower than some had hoped for and likely also a factor in investor disappointment.
