NEW YORK—Amazon shares surged after the company reported stronger-than-expected quarterly results, easing investor concerns over its escalating artificial intelligence spending and adding tens of billions of dollars to the net worth of founder Jeff Bezos as investors welcomed accelerating growth in its cloud business.
The stock climbed nearly 14% following the earnings report, driven by a 37% year-on-year increase in Amazon Web Services (AWS) revenue, its fastest growth in more than four years. The gains lifted Amazon's market value sharply and boosted the value of Bezos' shareholding, reinforcing his position among the world's wealthiest individuals.
Investors had closely watched whether Amazon's expanding investment in AI infrastructure would translate into stronger financial performance. Instead of reacting negatively to higher capital expenditures, markets focused on evidence that demand for AI-powered cloud services remains robust.
Chief Executive Andy Jassy said the company's AI investments are being made to meet existing customer demand rather than speculative future growth. He added that much of Amazon's planned cloud capacity has already been reserved by customers, indicating sustained demand for computing resources supporting generative AI applications.
Amazon also raised its projected 2026 capital spending to about $220 billion, reflecting continued investment in data centers, custom chips, networking infrastructure and other technologies supporting its AI strategy. Despite negative free cash flow resulting from the heavy spending, investors viewed the increased investment as a sign of confidence in long-term demand.
The earnings helped distinguish Amazon from some other large technology companies that have faced investor scrutiny over rising AI expenditures without corresponding improvements in financial performance. Analysts said Amazon's cloud results demonstrated that its AI investments were generating tangible returns through stronger AWS growth and profitability.
Several brokerages responded by raising their price targets for Amazon shares after the results, citing stronger-than-expected cloud revenue, resilient operating margins and improving prospects for AI-related services. Market participants also pointed to continued growth in Amazon's advertising business and subscription services as additional contributors to the company's performance.
Bezos, who stepped down as chief executive in 2021 and now serves as Amazon's executive chair, remains one of the company's largest shareholders. The rally in Amazon stock substantially increased the value of his holdings, reflecting renewed investor confidence in the company's AI-driven growth strategy.
