Amazon's cloud business is booming. But whose money is paying for it?

Key points

• Amazon's AWS cloud division generated $42 billion in revenue in Q2 2025, up 37% year over year.
• Amazon spent $173 billion on property and equipment in the fiscal year ended 30 June 2025, up from $107.65 billion the year before.
• The company raised its 2026 capital-spending forecast from $200 billion to $220 billion.
• Amazon ended the quarter with $7.6 billion less cash than it held 12 months ago, its first period of negative free cash flow this year.
• Investors rewarded the results by pushing Amazon's stock up nearly 10% in after-hours trading.

Amazon reported stronger-than-expected results for the second quarter of 2025 on Thursday, and the headline number that got the most attention was not profit. It was the cloud.

AWS, Amazon Web Services, the division that rents computing power to businesses over the internet, brought in $42 billion for the quarter, a 37% jump year over year. Investors pushed Amazon's share price up nearly 10% in after-hours trading.

What is Amazon actually spending all this money on?

Data centres and the chips to fill them, at a scale that is hard to picture.

Amazon spent $173 billion on property and equipment in the fiscal year ended 30 June 2025, a category that covers GPUs (specialised chips that handle the heavy computing AI needs), natural gas turbines, and raw plots of land where new data centres will eventually sit. A year earlier that figure stood at $107.65 billion. The company also raised its capital-expenditure forecast, the planned budget for big physical investments, from $200 billion to $220 billion for 2026. To partly cover that, Amazon dipped into its cash reserves, ending the quarter with $7.6 billion less than it held a year ago.

Amazon chief executive Andy Jassy told analysts the company is also developing its own chips, including the Trainium processor designed for AI training and the Graviton chip built on the Arm architecture common in smartphones. Custom silicon can cut costs and improve profit margins without showing up in the headline spending figures.

"AWS and Amazon Bedrock can have a wildly successful business without its own frontier model," Jassy said, referring to Bedrock, Amazon's service that lets companies plug multiple AI systems into their products. "There's not going to be a single model to rule them all."

Should ordinary people care about cloud earnings?

Directly, probably not. But the underlying dynamic matters.

As TechCrunch AI noted, a large portion of AWS revenue comes from AI companies paying to run their models. Anthropic, in which Amazon has invested heavily, pays Amazon for the computing power it needs. That means Amazon's cloud revenue and Anthropic's costs are, in part, the same transaction viewed from opposite sides. If AI companies cannot sustain that spending, Amazon's revenue line starts to look shakier.

Microsoft and Google reported similar cloud-driven earnings beats this quarter, and their shares also rose. We covered Microsoft's record $90 billion quarter on 29 July 2026 in our earlier report, where Azure's full-year revenue crossed $100 billion. Meta, by contrast, is spending heavily on AI infrastructure but has no clear cloud-revenue engine to show for it yet. Its stock fell 8% after earnings.

The pattern investors are drawing is simple: cloud hosts look like the steadiest part of the AI economy right now. But steady doesn't mean insulated. The question, as analyst David Cahn framed it, is whether total demand for AI will eventually justify a buildout running into the trillions of dollars. If it doesn't, the bill lands everywhere.

What this earnings season is really showing is that the cloud layer is borrowing credibility from the AI boom without having proved it can outlast one. Watch whether Anthropic and the other big AWS tenants start cutting compute spend before you decide Amazon's revenue line is as solid as this quarter makes it look.

Common questions

Does this affect what businesses pay for cloud services?

Not directly or immediately. AWS pricing is set separately from earnings results. But if cloud providers face sustained cost pressure, the economics of AI services for businesses could shift over a period of years.

What is Amazon Bedrock, exactly?

Bedrock is Amazon's service that lets companies build products using multiple AI models from different providers, including Anthropic's Claude, without managing the underlying computing infrastructure themselves.

Why does it matter that Amazon's free cash flow turned negative?

Free cash flow, the money left over after a company covers its operating costs and big investments, turning negative means Amazon is spending more than it is generating right now. Investors are accepting that because revenue is growing fast, but it signals the current pace of building cannot continue indefinitely without either revenue accelerating or spending slowing down.