Amazon beat Wall Street earnings estimates, driven by better-than-expected cloud-computing growth, a sign the company’s artificial intelligence bets are showing results.

The Seattle-based tech giant on Thursday reported $200.6 billion in total revenue for the second quarter, a three-month span that ended June 30. It was a 20% increase from last year and beat analysts’ predictions by about $3.5 billion. Amazon also reported $62.6 billion in profit, heavily boosted by more than $53 billion from the company’s investments in artificial intelligence startup Anthropic.

Amazon’s closely watched cloud-computing division, Amazon Web Services, reported $42.2 billion in revenue, an almost 37% year-over-year increase. Wall Street estimated cloud revenue would come in at $40.5 billion.

“AWS is booming, growing 36.7% year-over-year in Q2— our fastest growth in 18 quarters— and our AI and Chips businesses each eclipsed run rates of more than $25 billion,” Amazon CEO Andy Jassy said in a Thursday news release.

During an earnings call with analysts on Thursday, Jassy updated Amazon’s projected capital expenditures for the year— money that’s used to invest in AI infrastructure like data centers and high-tech computer chips. Amazon had estimated $200 billion in capital expenditures this year, but on Thursday bumped that up to about $220 billion.

At the same time, Amazon’s free cash flow is dwindling and dropped into the red last quarter. The company reported negative $7.6 billion in free cash flow, a decrease that Jassy defended by telling analysts that the upfront costs of AI would cause “cash flow headwinds” but he was confident the company would be monetizing its data centers in a few years. For comparison, Amazon had a positive free cash flow of $18.2 billion a year ago.

Jassy’s bullish attitude toward rising capital expenditure costs echoed sentiments from earlier this year, when he told shareholders in an annual letter that the company was not going to be conservative about investing in AI.

While investors were watching Amazon’s cloud revenue for signs of AI growth, Amazon’s e-commerce and logistics business had a strong performance as well. The online stores division, still Amazon’s largest, brought in $70.4 billion, up 15% from last year and beat analysts’ estimates.

Sales were driven by Amazon’s Prime Day, though the company does not break out sales numbers for the multi-day sales event.

The company also benefited from tariff refunds this quarter. Last year, Amazon said it had weathered the tariff storm early by pre-buying products, but effects were starting to show later into 2025.

Following the U.S. Supreme Court’s ruling in February that President Donald Trump’s sweeping tariffs announced in April 2025 were illegal, the U.S. Department of Treasury has disbursed about $81 billion so far in refunds to companies that imported goods.

Amazon reported that it received roughly $600 million in tariff refunds. Chief Financial Officer Brian Olsavsky told analysts some of that money will be returned to customers but didn’t specify how much.

Despite the bump in projected capital expenditures, Wall Street was pleased with Amazon’s performance and the share price rose by as much as 9% in extended trading. Amazon’s earnings came the same day Microsoft’s stock soared by 15%, a day after Microsoft reported strong earnings as well.

The two Seattle tech companies were part of a tech stock-induced rally in the market, after days of selloffs.

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