Amazon Raises Capital Spending Forecast Amid Strong Cloud Growth and AI Demand
Amazon reported its strongest cloud growth in over four years, with Amazon Web Services (AWS) revenue rising 37% to $42.2 billion for the second quarter of 2026. The results led the company to increase its annual capital spending forecast by 10%, now expected to reach $220 billion as it continues heavy investment in AI infrastructure and data centers. Despite these outlays, Amazon CEO Andy Jassy noted that demand remains so high that computing capacity is still insufficient for customer needs. The strong performance helped alleviate concerns about whether the massive investments by Big Tech firms are generating adequate returns. AWS contract backlogs rose to $496 billion from $364 billion in the previous quarter, reflecting robust future revenue potential. However, Amazon’s free cash flow turned sharply negative at -$7.6 billion for the trailing 12 months, compared to positive $18.2 billion a year earlier. The results align with strong performances by rivals like Microsoft and Alphabet, reinforcing confidence in AWS's market leadership amid rising AI demand.
Topics: AI Capital Expenditure Cloud Computing (AWS) Stock Movement