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 use of AI.
Wall Street expects revenue of $196.4 billion, up 17% from last year, and earnings of $1.82 per share. That’s actually in the middle of Amazon’s forecast for the second quarter.
Part of that growth is due to the calendar. Prime Day ran from June 23-26 this year, during the second quarter in the US and the largest markets. Last year it was played on July 8-11, in the third quarter. That gives Amazon’s sales numbers a boost this year-ago quarter lacked.
Another factor is the cloud. AWS grew revenue 28% last quarter, its fastest rate in nearly four years, and analysts expect the momentum to continue with revenue of $40.5 billion in the second quarter, up 31%, according to Zacks Consensus Estimates.
The company is planning a record $200 billion in capital spending this year, almost all of which is for data centers, servers and chips to support increased capacity to train and run AI models.
Amazon is making that investment in part out of demand from big AI companies including OpenAI and Anthropic, which have signed commitments to AWS worth $138 billion and more than $100 billion, respectively, over the coming years.
“We are not investing nearly $200 billion in capex through 2026,” CEO Andy Jassy wrote in his April shareholder letter.
Currently, the utility receives almost all of its revenue from Amazon’s operations. Free cash flow fell to $1.2 billion in the past 12 months, from $25.9 billion a year earlier.
Investors seem to be getting impatient with that trade in general. Google’s parent company’s earnings beat expectations last week and its stock fell anyway, after raising its forecast for annual revenue to $205 million. Microsoft reports earnings on Wednesday afternoon.
One differentiator for Amazon is its custom chip business – Graviton, Trainium and Nitro – which passed an annual revenue estimate of $20 billion last quarter. Jeff Bezos said this week that it is becoming the fourth pillar of the company, alongside Marketplace, Prime and AWS.
The company is adjusting its approach to developing an AI model. Business Insider reported this week that Amazon is shutting down most of its in-house Nova models and focusing engineers on a new frontier model effort, with a new flagship model expected to: Rename this fall.
Amazon cut jobs at its AGI organization last week and confirmed it is closing its San Francisco AI facility, while saying its frontier model research will continue.
At the same time, AWS is spending to help other companies spread AI, making $1 billion at the end of June to embed its engineers and business customers who build agent systems, following similar moves by OpenAI and Anthropic.
Check back with GeekWire for availability Thursday afternoon.
