Amazon's Revenue Growth Driven by Cloud Computing and Advertising

Amazon's second-quarter revenue growth of 20% year-over-year was driven by more than just its cloud computing platform. The company's cloud business saw a significant increase, with 37% year-over-year revenue growth.

However, Amazon's online advertising business also accelerated, reaching $19.8 billion in the second quarter, a 26% improvement from the same period last year. This revenue stream accounts for almost 10% of total revenue and comes with higher profit margins than e-commerce.

The company's use of artificial intelligence (AI) agents has improved ad effectiveness, resulting in an 8% lower cost per impression and a 6% lower cost per acquisition compared to non-AI campaigns. Amazon's AI segment, which focuses on software like AI agents, has reached a $25 billion annual revenue run rate.

The company's chip business, centered around Trainium chips, also exceeded this threshold, with a $25 billion annual revenue run rate. Both businesses combined have a triple-digit year-over-year growth rate and contribute to the company's overall results.