Amazon Stock Jumps 12% on Strong Earnings Despite $220 Billion AI Capex Hike

Amazon.com reported second-quarter results that beat analyst expectations, with revenue growth accelerating as its AI investments begin to pay off. The company announced a massive increase in capital expenditures, raising its 2026 capex guidance to $220 billion, citing higher memory costs and the need to expand AI infrastructure capacity. CEO Andy Jassy stated that even with this record spending, Amazon will not have enough capacity to meet surging demand for AI services. The stock jumped 12% in response, as investors focused on the strong revenue growth and improving profitability rather than the higher spending. The results underscore Amazon's aggressive push into AI, competing with Microsoft and Google in cloud and AI infrastructure. The capex hike reflects broader industry trends of rising costs for AI chips and memory, impacting the entire tech sector. Analysts see the move as a strategic bet that AI demand will continue to outpace supply, justifying the heavy investment.

Global Impact

Amazon's capex hike to $220 billion is a major signal for the global AI infrastructure race, reinforcing the dominance of US hyperscalers in shaping the AI supply chain. Economically, this spending will flow into semiconductor fabs, data center construction, and energy grids, creating ripple effects across Asia and the US.