Amazon Q2 revenue tops $200B; AWS jumps 37%, AI units hit $25B run rate

Amazon reported second-quarter revenue surges that beat analyst expectations, with overall revenue climbing 20 percent to more than $200 billion year-over-year. The standout performer was Amazon Web Services (AWS), which jumped 37 percent to $42.2 billion. Beyond headline cloud growth, the company disclosed that two AI-focused divisions—its AI cloud and chips businesses—each exceeded $25 billion annual revenue run rates, a measure of recurring sales. The market responded decisively, with Amazon stock jumping more than 7 percent in after-hours trading.

During an analyst call Thursday afternoon, CEO Andy Jassy underscored the significance of these results, saying AWS is "booming" and expressing confidence that AWS alone could "very possibly be a trillion-dollar annual revenue business for us in time." This statement reflects Amazon's conviction that infrastructure-layer AI services represent a durable, long-term business opportunity. Notably, Jassy addressed the company's approach to AI model development with nuance: while a Business Insider report claimed Amazon was winding down its proprietary AI model work (called Nova), Jassy denied the company was abandoning the effort and stated that "we are pursuing our own frontier model." However, he also emphasized that "AWS and Amazon can have a wildly successful business without its own frontier model," indicating the company is not betting its AI strategy solely on competing with OpenAI or Anthropic in frontier model development.

Instead, Amazon is using AWS to serve multiple constituencies. The platform offers customers access to dozens of third-party models from developers including OpenAI (maker of ChatGPT) and Anthropic (maker of Claude), supported by multibillion-dollar investments and partnerships with both companies. Jassy highlighted an emerging use case: some AWS customers are using the service to build their own foundation models—smaller, proprietary models that leverage their internal data rather than relying on larger models from external competitors. This strategy positions AWS as the foundational compute and storage layer regardless of which models customers choose to deploy.

The company's capital intensity continues to rise. On Thursday, Amazon increased its 2026 capital expenditure forecast to $220 billion, up from a previous estimate of $200 billion. This spending reflects the company's commitment to expanding AI infrastructure capacity. For context, Amazon, Microsoft, Alphabet, and Meta are collectively on track to pour around $700 billion into AI data centers, chips, and computing infrastructure in the current year—a scale that illustrates how central these investments have become to major technology companies' strategies.