Amazon's stock rose nearly 9% in after-hours trading after the company released its second-quarter results. Market focus was primarily on the accelerated growth of its cloud business and the continued increase in enterprise demand for AI infrastructure.

AWS revenue exceeded expectations.

The company's revenue for the quarter was $200.61 billion, exceeding the $196.47 billion expected by analysts surveyed by LSEG. Its cloud business, AWS, generated $42.2 billion in revenue, also surpassing market expectations of $40.54 billion.

AWS grew 37% year-over-year in the quarter, significantly faster than analysts' expectations of 31%, and the fastest growth rate for the business since 2021. Advertising revenue also exceeded expectations, reaching $19.81 billion, higher than the market's estimate of $19.43 billion.

This performance indicates that enterprise customers are still increasing their spending on cloud computing and AI. Amazon CEO Andy Jassy stated that the company's current production capacity is still insufficient to meet anticipated demand in 2026, and these constraints may continue into 2027.

Full-year capital expenditures revised upward to approximately $220 billion

Amazon has raised its full-year capital expenditure forecast from $200 billion to approximately $220 billion. In the June quarter alone, the company's capital expenditures reached $54.2 billion, up from $32.1 billion in the same period last year.

The new investments will primarily be used for data centers, servers, AI chips, and other cloud infrastructure. However, this large-scale investment is also putting pressure on cash flow. The company's free cash flow over the past 12 months was a net outflow of $7.6 billion, compared to a net inflow of $18.2 billion in the same period last year.

Third-quarter guidance was cautious.

Amazon expects third-quarter revenue to be between $197 billion and $202 billion, lower than analysts' expectations of $204.1 billion. The company stated that the earlier timing of Prime Day, moving from July to June, was one of the factors affecting the guidance.

Despite the company's weak outlook for the next quarter and continued increases in capital expenditures, the market is more focused on the recovery in AWS growth and the continued strong long-term demand for AI infrastructure. This is the main reason why Amazon's stock price rose significantly in after-hours trading.