TLDR
- Amazon jumps on 17% revenue growth but drops after hours on rising AI costs
- AWS drives strong growth, yet heavy AI spending hits Amazon stock late
- Amazon profit surges but free cash flow falls amid AI infrastructure push
- Strong earnings boost Amazon stock before after-hours reversal on spending
- Amazon revenue beats expectations, but AI capex pressures cash flow
Amazon (AMZN) stock rose after strong quarterly growth, then reversed in after-hours trading as results highlighted heavy AI spending and mixed cash flow trends. Shares of Amazon.com, Inc. closed at $263.04, up 1.29%, before falling to $258.45, down 1.74%. The move reflected solid revenue expansion alongside rising capital intensity tied to artificial intelligence infrastructure.
Revenue Growth Strengthens Across AWS and Core Segments
Amazon reported first quarter net sales of $181.5 billion, marking a 17% year-over-year increase. Excluding foreign exchange effects, revenue still grew 15%, showing consistent demand across major segments. North America sales reached $104.1 billion, while international sales climbed to $39.8 billion.
AWS remained the primary growth driver, posting a 28% revenue increase to $37.6 billion. The segment continued to benefit from strong enterprise demand for cloud and AI workloads. Additionally, Amazon expanded compute offerings through custom chips such as Trainium and Graviton.
Operating income rose to $23.9 billion from $18.4 billion in the prior year period. AWS contributed $14.2 billion, while North America generated $8.3 billion in operating income. International operations also improved, reaching $1.4 billion compared with $1.0 billion last year.
Profit Surge Driven by Investments and AI Expansion
Amazon posted net income of $30.3 billion, up sharply from $17.1 billion year-over-year. Earnings per share increased to $2.78, reflecting both operational gains and investment-related income. A significant portion of profit came from a $16.8 billion pre-tax gain linked to Anthropic.
Operating cash flow rose 30% to $148.5 billion on a trailing twelve-month basis. However, free cash flow declined sharply to $1.2 billion due to higher capital expenditures. The company increased spending on property and equipment by $59.3 billion, mainly to support AI infrastructure.
Amazon accelerated its AI strategy by scaling chip deployment and expanding partnerships. The company secured multi-gigawatt commitments for Trainium chips from major AI firms. It also expanded Amazon Bedrock capabilities, enabling faster deployment of enterprise-grade AI applications.
Outlook Signals Continued Expansion with Heavy Capital Focus
Amazon expects second quarter net sales between $194 billion and $199 billion, indicating 16% to 19% growth. The company forecasts operating income between $20 billion and $24 billion, slightly above the prior year. Guidance assumes continued demand across cloud, retail, and AI-driven services.
The company also expanded AI integration across products, including health services, advertising, and logistics systems. Amazon increased delivery speed and broadened same-day and ultra-fast delivery coverage. These initiatives aim to strengthen customer engagement and operational efficiency.
Despite strong growth, rising capital spending remains a key theme in Amazon’s strategy. The company continues to prioritize long-term AI infrastructure investments over near-term free cash flow. Consequently, the post-earnings stock reversal reflects market adjustment to higher spending intensity.
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