AWS Growth Bursts Through Amazon's Free Cash Flow

Amazon's cloud business, Amazon Web Services (AWS), saw its fastest growth in nearly four-and-a-half years, expanding by 37% in the second quarter. Despite this impressive performance, AWS's rapid expansion is burning through free cash flow, reversing a $25.8 billion inflow to an outflow of $7.6 billion.

AWS generated $42.2 billion in sales and $16.6 billion in operating income for Amazon, accounting for 60% of the company's total operating profit. This growth has investors looking for evidence that AWS can turn its infrastructure spending into a cash avalanche.

Amazon's stock price has not reflected this optimism, slipping by approximately 0.9% to $258.59 on Wednesday despite AWS's strong performance. The stock sits at 4.87% above Amazon's GF Value estimate of $246.57 and is valued at around 21 times earnings.