Wall Street rallied on Friday, powered by a more than 15% surge in Amazon (AMZN) shares, as the tech giant’s strongest quarterly revenue growth in over four years directly confronted the anxiety that had been rattling global markets: that massive spending on AI infrastructure might take too long to pay off.
The PHLX semiconductor index had tumbled more than 20% from its June record closing high, and criticism that Big Tech was “irresponsibly burning cash” on AI had grown louder. Amazon’s results, together with Microsoft’s equally strong cloud outlook earlier in the week, changed the narrative overnight. Jake Dollarhide, chief executive of Longbow Asset Management, captured the shift: “There were worries that Amazon’s spending was just moonshot spending, that it’s irresponsible spending, and Andy Jassy just put those fears to bed.”
The standout came from Amazon Web Services. AWS revenue jumped 37%, its fastest pace in nearly five years, markedly easing overinvestment concerns that had dogged the sector. More crucially, management disclosed for the first time that the company’s AI business and its custom chip business had each surpassed a $25 billion annual revenue run rate, with both growing triple digits year-over-year. That gave a far clearer return narrative to the $220 billion in capital expenditures Amazon has planned for this year.
Beyond the cloud spotlight, the e-commerce segment also surprised to the upside. North America revenue rose 16% and international revenue climbed 15%, both marking their fastest growth in five years. Amazon credited faster delivery speeds — more than 40% of Prime orders were delivered same-day or overnight — as well as a 26% jump in advertising revenue. The shift of Prime Day from July to June, driven by the FIFA World Cup and other events, added roughly five percentage points to the unit’s growth.
What Amazon’s report ultimately revealed is a multidimensional picture: AI investment is not only directly fueling the explosion in cloud and chip businesses, but also feeding back into the core retail operation through faster logistics and more efficient advertising. That broad-based momentum restored confidence in the legitimacy of enormous AI spending.
On the same day Apple tumbled 7.4% after warning of supply constraints and weakening demand, Amazon single-handedly propped up faith in the AI trade — and showed that heavy computing investments are translating into heavy revenue growth.
