Amazon reported better-than-expected second-quarter earnings on Thursday, with net sales rising 20% and cloud revenue as a bright spot, sending its stock up nearly 10% in after-hours trading. Amazon spent $173 billion for the fiscal year ended June 30 on property and equipment—covering GPUs, natural gas turbines, and land—up from $107.65 billion the year before. It raised its 2026 capex forecast from $200 billion to $220 billion, even as it dipped into cash reserves, ending the quarter with $7.6 billion less cash than 12 months ago, marking its first period of negative free cash flow this year. AWS revenue rose 37% year over year, clocking $42 billion for the quarter. Amazon is also betting on chips like Trainium and Graviton processors, which don’t show up in capex numbers but can improve cloud margins. CEO Jassy said during the Q2 earnings call, “We see the AI business following very much the same margin trajectory we saw in the core business before,” and noted that “AWS and Amazon Bedrock can have a wildly successful business without its own frontier model.” Similar patterns appeared at Microsoft and Google, whose shares popped after strong cloud revenue, while Meta’s stock fell 8% after reporting quarterly earnings this week due to cash flow crunch and continued spending. Investors are treating cloud hosts as the most reliable part of the AI stack, while remaining skeptical about AI labs and startups