Amazon Q2 Profits Rise 35% Amid AI Spending Surge

Amazon reported strong Q2 2025 financial results with net sales up 13% to $167.7 billion and net income rising 35% to $18.2 billion, driven largely by growth in its cloud computing division, AWS, which saw revenues increase 17.5% to $30.9 billion. Despite beating sales and profit expectations, Amazon's shares fell after hours due to concerns about rising costs, especially within AWS, where operating income grew less than 9% and profit margins declined to 32.9%, the lowest since late 2023, amid heavy investments in AI infrastructure. CEO Andy Jassy emphasized that AI is a transformative technology and investment in AI remains a priority, with capital expenditures expected to reach approximately $118.5 billion for 2025, surpassing competitors like Meta, Microsoft, and Google. Amazon's guidance for Q3 operating income fell below analyst estimates, projecting $15.5 billion to $20.5 billion versus the expected $19.4 billion, fueling investor anxiety over the high spending to keep pace in the AI race. AWS, while the largest cloud business with an annual run rate exceeding $123 billion, faces growth challenges against rapidly expanding rivals Microsoft Azure and Google Cloud, which reported significantly higher quarterly growth rates. Overall, Amazon is balancing strong revenue and profit growth with heavy AI-related capital investments that are currently pressuring margins and future profit expectations.