Key Points Summary
Amazon’s second-quarter financial report was impressive, but there were some “special circumstances”: Revenue increased by 20% to $20.06 billion, and net profit soared by 244% to $62.6 billion (however, $53.4 billion of this came from investment gains on Anthropic, not from its main business). The AWS cloud computing business experienced the fastest growth in 18 quarters (37% to $42.2 billion), with backlogs of orders reaching $496 billion, which directly drove the stock price up nearly 10% after the report was released. Both its AI and chip businesses generated annual revenue of over $25 billion each. In the retail sector, Amazon retained customers through faster delivery, AI-powered shopping tools, and a low-price strategy. It also received a $600 million tariff refund, which was returned to its customers.
1. The “Truth” Behind the Surging Net Profit: Most of It Came from Investments, Not Sales or Cloud Services
Amazon’s net profit for Q2 may seem staggering ($62.6 billion, up 244% year-over-year), but upon closer inspection, $53.4 billion came from the sale of some shares in Anthropic—a one-time gain, not from regular operations such as retail sales or AWS service fees. Excluding this investment income, the net profit from its main business was only around $9.2 billion, which is still considerable but not as exaggerated as it appears. So don’t let the 244% growth fool you; this money was a one-time event and not a continuous source of revenue.
2. AWS Business: A Dual Engine of Cloud Computing and AI, with an Overwhelming Number of Orders
AWS (Amazon Web Services) was the highlight of the financial report:
- It achieved its fastest growth in 18 quarters (37%) with revenue reaching $42.2 billion. This is due to two factors: corporate customers using its basic cloud services for data storage and computing, as well as a surge in demand for AI services that help them build their own AI models.
- The backlog of orders reached $496 billion (a triple-digit year-over-year increase), indicating that customers have signed contracts but AWS has not yet completed the services or deliveries. This means that half of the “future revenue” has already been secured, showing strong demand from businesses for AWS.
- This outperforming result excited investors, and the stock price rose nearly 10% after the report was released.
3. AI and Chips: Amazon is Making Heavy Investments, with Annual Revenue Exceeding $25 Billion
Amazon is actively moving in the AI space:
- The annual revenue from its AI and chip businesses has surpassed $25 billion each (annualized based on the current quarter). This is a significant figure.
- In terms of strategy, Jeff Bezos stated that “no single AI model will dominate,” so Amazon supports both open-source models (used by many companies) and develops its own models to better control costs.
- Its Trainium chips, used for AI training, are becoming increasingly popular among AI startups, such as NEURA Robotics and Odyssey.
- Amazon also invested $1 billion in building a team of FDE (Frontline Deployment Engineers) to work directly with customers on setting up and deploying AI systems, providing more stable customer support.
4. Retail Business: Faster Delivery, AI-Assisted Tools, and Low Prices to Retain Customers
Retail is Amazon’s core business, and it made several improvements this quarter:
- Delivery speed: The number of Prime Member items delivered same-day or the next day increased by over 40%, especially for food, groceries, and daily necessities—high-frequency items that customers value faster delivery.
- AI shopping tools: It launched Alexa for Shopping (which allows users to check price history and search for product information) and the ASA assistant (a personal shopping advisor) to make shopping easier.
- Low-price strategy: The number of low-priced items on Amazon Haul in the U.S. has increased by nearly 20 times, with over 6 million items now priced below $10. Jeff Bezos said they will maintain prices competitive with or lower than those of competitors like Walmart and Target, offering additional discounts during promotions to attract customers.
5. Where Will the Money Be Spent in the Future? $220 Billion in Capital Expenditure by 2026
Amazon plans to invest heavily over the next few years:
- The capital expenditure for Q2 ($531 billion) was mainly used on AWS and generative AI technologies.
- It expects cash capital expenditures to reach $220 billion by 2026, up from the original plan of $200 billion this year. The increase is due to rising memory costs (AI requires a large amount of memory chips).
- This shows that Amazon is betting on the future of AI and cloud computing, willing to invest more now to maintain its technological leadership.
Additional Highlight: $600 Million in Tariff Refunds Returned to Customers
Amazon received a $600 million tariff refund in Q2 and proactively contacted affected customers to return the money. This not only complies with regulations but also enhances customer satisfaction—after all, who doesn’t like an unexpected refund?
Overall, Amazon’s financial report highlights its growing advantages in AI and cloud computing, as well as its efforts to retain customers through improved experiences and competitive pricing in the retail sector. Although the net profit includes non-recurring gains, the growth in its core businesses (especially AWS) and its future investment plans position it competitively among technology giants.