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Yesterday, Amazon (Nasdaq: AMZN) announced its second quarter results that surpassed market expectations, but the stock fell 3% in the after-hours session due to worries about geo-political conditions.
 

Amazon’s Financials

Amazon’s second quarter revenues grew 13% to $167.7 billion, exceeding analyst estimates of $162.1 billion. EPS of $1.68 was significantly better than the analyst expectations of $1.33.

Revenues from Amazon Web Services (AWS) came in at $30.9 billion, marginally ahead of analyst estimates of $30.8 billion. Advertising services revenues of $15.7 billion were also ahead of analyst estimates of $14.9 billion. Seller services revenues grew 11% $40.3 billion, ahead of analyst expectations of $38.7 billion.

Amazon expects third quarter revenues of $174-$179.5 billion, ahead of market expectations of $173 billion. Amazon maintained that recessionary fears and the unstable tariff and trade policies could affect its guidance.
 

Amazon’s AI Investments

Amazon continues to invest in its AI offerings. It is looking to spend $100 billion in capital expenses due to the rush for big AI investments. 

Earlier this quarter, Amazon invested in Fable Studio, the company that built the Showrunner platform that leverages AI to let users create TV shows. Users can create scenes and full episodes by providing a few words about what they want to see. The platform can create voices, dialogue, scenes, and even develop storylines. Showrunner is known for having created an AI-based version of South Park. Terms of Amazon’s investment were not disclosed.

Movie production houses are using AI not only to improve the visuals but also to create content. Netflix recently spoke of how it reduced its production costs by using AI. Hollywood is using AI as well. The Oscar-nominated films Emilia Perez and The Brutalist used AI to alter voices. Adrian Brody even won the Academy Award for Best Actor despite using AI to fine tune his accent when he spoke Hungarian in The Brutalist.

Additionally, Amazon is also looking to increase its investment in Anthropic beyond the $8 billion it committed last year. Amazon wants to become the leading investor in Anthropic, which already has Google as its biggest investor. The two companies plan to collaborate on one of the world’s largest data center projects. Together, they want to cross-sell Anthropic’s AI technology to Amazon’s customers.

Amazon is already benefiting from its investment in Anthropic. According to analysts, Anthropic could help Amazon generate $1.28 billion in sales in 2025, with a potential to grow to $5.6 billion in 2027. Anthropic is a big consumer of AWS’s cloud services, including its Trainium AI chips. A recently released report revealed Anthropic to be the LLM leader in enterprise market with a 32% share, compared with OpenAI’s 25%.

With Microsoft and OpenAI’s growing tensions, a bigger and a more stable relationship with Anthropic could help push Amazon to the forefront of AI growth.

Meanwhile, Amazon continues to expand its AI offerings across the board. It launched GenAI tools to enhance shopping experience, including Hear the Highlights to provide product summaries and reviews into audio clips, and Enhance My Listing to keep listings current. Alexa+, the AI-version of Alexa, was released with early access.

Within AWS, it launched Kiro, an agentic integrated development environment that transforms software development through innovations like spec-driven development. It also released AI agents and tools in AWS Marketplace with listings from leading providers including Anthropic, Accenture, PwC, Salesforce, and IBM, so that customers can easily discover and deploy agents. It introduced DeepFleet, an AI model that makes Amazon’s own robots work smarter by coordinating movements so as to reduce bottlenecks and improve their travel efficiency by 10%.

Its stock is trading at $234.11 with a market capitalization of $2.49 trillion. It touched a 52-week high of $242.52 in February this year and has recovered from the 52-week low of $151.61 that it was trading at in August last year.

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