What Happened?
Shares of cloud computing and online retail behemoth Amazon NASDAQ:AMZN jumped 14% in the morning session after the company reported second-quarter results that topped market expectations, driven by a significant beat in its cloud computing division. Amazon's revenue grew 19.6% year-over-year to $200.6 billion, surpassing analyst estimates.
Its GAAP earnings per share of $5.75 also significantly beat expectations, although this figure was boosted by a large one-time, non-operating income of $53.4 billion from the company's investment in Anthropic, an AI company. The key driver for investor optimism was Amazon Web Services (AWS), which grew 37% year-over-year, outperforming expectations for 31% growth. However, the company's revenue guidance for the upcoming quarter came in slightly below analysts' forecasts. Despite the mixed outlook, investors focused on the strong current performance, particularly in the high-margin AWS segment.
What Is The Market Telling Us
Amazon’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. Moves this big are rare for Amazon and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 10.4% on the news that the company reported third-quarter results that surpassed Wall Street's expectations, driven by strong growth in its cloud computing division. Amazon's net sales rose 13.4% from the previous year to $180.2 billion, beating estimates, while earnings per share came in at $1.95, also well above analysts' forecasts. A key highlight was Amazon Web Services (AWS), the company's cloud unit, where sales growth accelerated to 20%, a rate not seen since 2022, reaching $33.01 billion.
This strong performance from its most profitable division reassured investors. Additionally, the company's advertising business continued to show robust growth, with revenue increasing by 21.4% year-over-year. The positive results across key segments, particularly the acceleration in AWS, signaled healthy demand for the tech giant. Operating profit missed, but excluding two one-time charges, it would have beaten, and the market appeared to understand this. Overall, this print featured some key positives.
Amazon is up 19.4% since the beginning of the year, and at $270.41 per share, it is trading close to its 52-week high of $274.99 from May 2026. Investors who bought $1,000 worth of Amazon’s shares 5 years ago would now be looking at an investment worth $1,623.
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