Amazon Stock Surges on AWS Growth and $1 Trillion Revenue Prediction
Amazon's AWS division is accelerating its growth, reaching a revenue of $42.2 billion in the second quarter, a 37% increase from the same period last year. This marks the fastest revenue growth for AWS in nearly four and a half years.
CEO Andy Jassy predicts that AWS will become a $1 trillion revenue business, citing strong return on invested capital (ROIC) and free cash flow. He also explained the economics of the cloud business, stating that AWS should break even on its server and networking investments in two to three years.
Jassy's predictions and explanations seem to have struck a chord with investors, causing Amazon's stock price to surge after the earnings report. The company's revenue jumped 20% year over year to $200.61 billion, exceeding analyst expectations.
Amazon also increased its capital expenditure budget from $200 billion to $220 billion due to higher memory costs. Jassy emphasized that AWS demand continues to outstrip capacity and will continue in 2027, with the company already seeing striking demand for 2028.