Amazon delivered strong second-quarter results, surpassing Wall Street’s expectations with revenue of $167.7 billion—up 13% year-over-year—and net income rising to $18.2 billion. Earnings per share reached $1.68, beating analyst forecasts. Despite this robust performance, the company’s stock slipped more than 3% in after-hours trading, as investors reacted to concerns about the performance of Amazon Web Services (AWS), the company’s cloud division.

AWS remains a central profit driver for Amazon, generating $30.9 billion in revenue for the quarter, an increase of 17.5% from the previous year. While this growth matched analyst expectations, the segment’s profit margins are under pressure due to ramped-up investments in artificial intelligence infrastructure. With the AI race intensifying among tech giants, Amazon is significantly increasing capital expenditures, primarily to boost cloud and AI capacity. The company expects capital spending to exceed $100 billion in 2025, up from $83 billion in 2024.

Amazon’s core retail and subscription services divisions also showed strength. Revenue from Prime subscriptions increased by 12% to $12.2 billion, and international as well as North American sales both climbed by 11%. The company reported record delivery speeds and improved in-stock availability, highlighting operational improvements.

Looking ahead, Amazon forecasts third-quarter net sales between $174 billion and $179.5 billion, ahead of analyst projections. Operating income is expected to range from $15.5 billion to $20.5 billion. However, as AI-driven transformation accelerates, Amazon’s CEO has indicated plans to streamline the corporate workforce.

In summary, while Amazon’s financials continue to impress, competitive pressures and the high cost of AI investment are weighing on sentiment, particularly concerning the AWS unit. Investors remain watchful as Amazon navigates the changing landscape of cloud computing and artificial intelligence.