Amazon shares jumped 15.32% on Friday and closed at $271.58 after the company reported second-quarter earnings that blew past analyst expectations. Revenue hit $200.6 billion, up 19.6% year over year, beating the $197.0 billion consensus. Profit came in at $5.75 per share, far above the $1.81 analysts had forecast.
AWS Growth Accelerates to Fastest Pace in 18 Quarters
Amazon Web Services grew 36.8% to $42.2 billion, its strongest growth in four and a half years. The cloud unit's backlog of contracts reached $496 billion, roughly 2.5 times the level a year ago. That backlog signals sustained demand for cloud infrastructure even as the company pours capital into expansion.
Analysts Raise Price Targets After Blowout Quarter
More than a dozen banks lifted their price targets on Amazon following the report. Benchmark raised its target to $400, JPMorgan to $365, and others to $350, $345, $335, $330, and $315. Cantor Fitzgerald trimmed its target to $320 but kept an Overweight rating. Wolfe Research held at $315, pricing the stock at 30 times expected 2027 profit. Benchmark analyst Daniel Kurnos called Q2 one of Amazon's best quarters in at least 10 years.
Heavy Spending on Data Centers Weighs on Cash Flow
Despite the earnings beat, Amazon's free cash flow over the past 12 months was negative $7.6 billion, compared to positive $18.2 billion a year earlier. CEO Andy Jassy plans to spend about $220 billion this year on data centers and chips to support AWS growth and AI workloads. The heavy investment is a bet that the cloud boom will continue, but it's squeezing near-term cash generation.
Amazon expects third-quarter sales between $197 billion and $202 billion. Investors will watch whether the spending spree pays off as the company navigates a mixed economic outlook.
