On the 30th (local time), Amazon reported second-quarter earnings that exceeded market expectations after the market closed. Although Amazon lowered its third-quarter revenue guidance and raised its full-year capital expenditure forecast, its stock surged nearly 10% in after-hours trading.
Amazon announced that its second-quarter earnings per share (EPS) totaled $5.75, significantly surpassing the $1.68 recorded in the same period last year and far exceeding FactSet’s analyst consensus estimate of $1.82.
The surge was largely driven by a sharp increase in the valuation of Anthropic, an AI company held by Amazon, which boosted non-operating income.
Revenue for the same period reached $201 billion, up 20% year over year, surpassing analysts’ consensus estimate of $197 billion.
Amazon Web Services (AWS), Amazon’s cloud service segment, generated revenue of $42.2 billion, a 37% increase from the same period last year, outpacing the market’s expected growth rate of 31%. AWS’s operating profit margin also reached 39%, exceeding market expectations.
Second-quarter advertising revenue totaled $19.8 billion, surpassing the market forecast of $19.4 billion.
Amazon’s second-quarter capital expenditure rose sharply to $54 billion from $32.1 billion in the same period last year, significantly exceeding its operating cash flow of $8.8 billion. As a result, Amazon recorded negative free cash flow for two consecutive quarters.
Amazon is covering its cash shortfall through new borrowing. Long-term debt increased by $63 billion during the first half of this year, excluding a $25 billion bond issuance conducted in July after the second quarter ended.
In June, Amazon secured a loan facility of $17.5 billion but has not yet reported using any portion of it. The loan can be utilized before the current quarter ends.
Interest expenses remain relatively low at 0.7% of revenue, though the ratio of interest expenses to revenue is rising rapidly. Amazon also holds long-term lease liabilities totaling $94 billion.
During an earnings conference call, CEO Andy Jassy revised this year’s capital expenditure guidance upward from $200 billion to $220 billion. The primary reason for raising the capital expenditure forecast was the increase in memory semiconductor prices.
He stated, “Even with a $220 billion investment, it will still fall short of meeting all demand by 2026,” and added, “This situation is expected to continue into 2027. In fact, the demand already secured for 2028 is astonishing.” AWS’s backlog of contracts stands at $496 billion.
Unlike Alphabet and Meta Platforms, which saw their stock prices plunge after raising capital expenditure forecasts recently, Amazon has shown a significant upward trend in its stock price during after-hours trading.
Amazon provided third-quarter revenue guidance of $197 billion to $202 billion, falling short of analysts’ consensus estimate of $204.1 billion.
Amazon’s stock closed up 3.9% at $2,353.50 during regular trading hours and is now rising nearly 10% further in after-hours trading.
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