Amazon stock rises over 20% as AI demand fuels AWS growth

Huo Xing Finance reports that on August 4, Amazon’s stock hit a new intraday high on Monday, with its market capitalization surpassing $3 trillion for the first time. In the two trading days following its earnings release, the company’s stock rose more than 20%, as the market reassessed the growth potential of its AI infrastructure and cloud business. The primary driver behind the stock rally was accelerated growth in AWS. Amazon’s second-quarter revenue increased 20% year-over-year to $200.6 billion, with AWS revenue reaching $42.2 billion, up 37% year-over-year—the fastest growth rate in nearly 18 quarters. Meanwhile, AWS’s backlog rose from $364 billion in the prior quarter to $496 billion, signaling sustained expansion in AI-related cloud computing demand. Amazon CEO Andy Jassy stated that the company’s AI business and in-house chip business each now generate annualized revenues exceeding $25 billion. He added that even with continued investment, Amazon’s computing resources will still be insufficient to meet all customer demand by 2026, and AI infrastructure demand could persist through 2028. To meet rising AI compute demands, Amazon has raised its 2026 capital expenditure plan from $200 billion to $220 billion, with a focus on data centers, servers, chips, and networking equipment. Bank of America Securities estimates that the combined 2026 capital expenditures of Amazon, Microsoft, and Google could reach $860 billion. However, massive AI investments have pressured Amazon’s short-term cash flow. As of the second quarter, the company’s free cash flow over the past 12 months stood at negative $7.6 billion. Jassy noted that there is a timing mismatch between current investments and revenue recognition; as data center investments begin generating returns, future revenue growth is expected to outpace capital expenditure growth. The market believes that AI commercialization is reshaping the valuation logic of the cloud computing industry. Beyond Amazon, Microsoft Azure grew 43% in the second quarter, while Google Cloud expanded 82%, indicating that enterprise AI compute demand remains in an expansion phase. Analysts note that investors are increasingly distinguishing between winners and losers among tech giants—companies with cloud platforms, customer bases, and AI infrastructure capabilities are likely to be the primary beneficiaries of the next AI investment cycle.