Amazon shares jumped 15.3% on Friday, the stock's largest one-day advance since 2012, after Amazon Web Services delivered its fastest growth in over four years and allayed investor concerns about the company's aggressive artificial intelligence spending.

Shares closed at $271.58 following second-quarter results that topped expectations across revenue, operating profit, cloud computing, and advertising.

Quarterly sales climbed 20% year-over-year to $200.6 billion, while operating income rose 43% to $27.5 billion.

AWS was the primary catalyst behind the market reaction. The cloud division's revenue grew 37% to $42.2 billion — its strongest expansion in more than four years and well above Wall Street estimates of roughly 31%. AWS operating income reached $16.6 billion, up from $10.2 billion a year earlier, representing more than half of Amazon's total operating profit.

The results eased worries that Amazon was ceding ground to Microsoft and Google in cloud and AI infrastructure. AWS remains the largest cloud provider globally by revenue, though Microsoft Azure and Google Cloud have been growing rapidly on the back of enterprise AI adoption. Amazon disclosed that both its AWS AI business and its custom chip operation have each surpassed $25 billion in annual revenue run rates, with both expanding at triple-digit growth rates. Amazon's push with its custom Trainium chips also positions it to reduce reliance on Nvidia GPUs, which have been the dominant hardware for AI workloads but remain in tight supply.

The company has broadened its Trainium chip platform and secured infrastructure commitments from major customers including Anthropic, OpenAI, Uber, and Pinterest. The OpenAI commitment is particularly notable given that the ChatGPT maker has primarily relied on Microsoft Azure for its cloud infrastructure.

Robust demand led Amazon to increase its projected 2026 capital expenditure by 10% to $220 billion, a figure that underscores the unprecedented scale of the current AI infrastructure buildout among hyperscale cloud providers. CEO Andy Jassy stated that even with the higher spending, the company still does not have enough computing capacity to satisfy customer demand. Most available AWS capacity for 2027 has already been reserved, and customers have also committed to capacity slated to come online in 2028.

AWS's contract backlog surged to $496 billion at quarter-end, up from $364 billion three months prior, indicating that much of Amazon's planned infrastructure buildout is backed by existing customer commitments.

The market response marked a shift in how investors are assessing the AI investment cycle. Meta and Alphabet recently drew negative reactions after raising investment forecasts while reporting pressure on free cash flow. Amazon, by contrast, was rewarded for raising spending because AWS simultaneously delivered faster revenue growth and higher operating income.

Still, Amazon's own cash flow faces pressure. Free cash flow over the trailing twelve months swung to a $7.6 billion outflow from an $18.2 billion inflow a year earlier, driven largely by elevated AI infrastructure spending.

Jassy noted that Amazon typically begins investing in data centers roughly two years before they become operational, meaning costs accrue well before associated revenue materializes. He added that AI servers can recover their costs in under three years.

Amazon's other segments also contributed to the quarterly performance. Advertising revenue grew 26% to $19.8 billion, North American sales increased 16% to $116.2 billion, and international sales rose 15% to $42.2 billion.