Amazon Shares Skyrocket After AWS Beats Expectations, Warns of Future Capacity Shortfalls

Amazon's (AMZN) second-quarter results sent shockwaves through the market, with its cloud business Amazon Web Services (AWS) beating expectations and propelling the company's shares up by 10.4% overnight.

AWS reported a 37% growth in sales to $42.2 billion, surpassing analyst predictions of $40.6 billion. This impressive performance has led to a significant increase in Amazon's capital expenditure (CapEx) forecast for the year, rising by $20 billion to $220 billion.

In an analyst call, CEO Andy Jassy stated that despite this increased spending, 'we will still not have enough capacity to meet all the demand we have in 2026.' He further emphasized that even with record-breaking investments, Amazon's new data centers would be insufficient to meet the soaring cloud demand. This sentiment was echoed by CFO Kaven Parekh, who noted that the same dynamic is expected to persist in 2027.

The market reaction for Amazon was starkly different from Alphabet's (the parent company of Google Cloud), which saw its shares slide after raising its CapEx target last week despite reporting record growth in its cloud business. The shift in sentiment on Stocktwits, a social media platform for traders and investors, indicates that the retail view has turned 'extremely bullish' for Amazon.