Amazon earnings jump on cloud computing strength but margins narrow

 

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Amazon beat Wall Street forecasts for AI-fuelled cloud computing growth on Thursday, though margins at the company’s closely watched segment narrowed as it reported a jump in capital spending.   Sales at the Seattle-based company’s cloud division, Amazon Web Services, rose 19 per cent in the three months to June 30 to $26.3bn, compared with analyst forecasts for sales of $26bn. However, margins at the unit, which is a core driver of the ecommerce group’s profits, narrowed by 2 percentage points to 36 per cent, as Amazon reported a 50 per cent increase in company-wide capital spending to $17.6bn during the quarter compared with the same period last year. Big Tech groups including Amazon and rivals Microsoft and Google parent Alphabet have come under intense scrutiny from investors looking for evidence that the massive investments being poured into AI technology and infrastructure are starting to pay off.  Net sales across Amazon’s sprawling empire, which includes its ecommerce platform, rose 10 per cent to $148bn, missing analyst estimates for $148.6bn. Net income for the second quarter increased to $13.5bn billion, well ahead of analyst forecasts for $11bn. Shares in Amazon, which have risen by more than a third in the past 12 months, slipped 4 per cent in after-hours trading in New York.