From Seattle's own, GeekWire, July 29:
Amazon earnings preview: Wall Street looks for more cloud growth as AI spending hits a record
Amazon reports quarterly earnings Thursday afternoon, facing the same test as every other big tech company right now: whether it’s generating enough business to justify its massive AI spending.
Wall Street expects revenue of about $196.4 billion, up 17% from a year ago, and earnings of $1.82 per share. That’s essentially the midpoint of Amazon’s own forecast for the second quarter.
Part of that growth is due to the calendar. Prime Day ran June 23-26 this year, during the second quarter in the U.S. and most large markets. Last year it ran July 8-11, in the third quarter. That gives Amazon’s retail numbers a boost this time that the year-ago quarter didn’t have.
Another factor is the cloud. AWS grew revenue 28% last quarter, its fastest rate in nearly four years, and analysts expect the acceleration to continue with revenue of roughly $40.5 billion for the second quarter, up 31%, according to Zacks Consensus Estimates.
The company plans a record $200 billion in capital expenditures this year, nearly all of it for data centers, servers and chips to support increased capacity for training and running AI models.
Amazon is making those investments based in part on demand from big AI companies including OpenAI and Anthropic, which have signed commitments to AWS worth $138 billion and more than $100 billion, respectively, for the coming years.
“We’re not investing approximately $200 billion in capex in 2026 on a hunch,” CEO Andy Jassy wrote in his April shareholder letter.
In the meantime, the spending is absorbing nearly all of the cash from Amazon’s operations. Free cash flow fell to $1.2 billion over the past 12 months, from $25.9 billion a year earlier....
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And more to come after the close.
