Why Is Amazon Stock Moving Today?

Amazon shares are up 2.01% in Friday's session after second-quarter results that look, at first glance, like the biggest profit jump in the company's history. Profit did rise more than three times over. But most of that increase did not come from selling anything, and the part that did come from the business is a different — and more useful — story.

The number everyone is quoting, and what is actually inside it

Amazon reported net income of $62.6 billion for the quarter, or $5.75 per diluted share. A year earlier those figures were $18.2 billion and $1.68. That looks like profit more than tripled.

Inside that total sits $53.4 billion of what the company calls non-operating pre-tax other income, coming primarily from its investments in Anthropic, the AI company Amazon has backed. "Non-operating" means it has nothing to do with selling goods or renting computing power. It is an accounting revaluation: Amazon's stake in Anthropic is judged to be worth much more than before, so the increase is booked as income. No cash changed hands, and the gain can reverse if that valuation falls. Strip it out and the profit picture is far more ordinary.

The part that is the business

Operating income — profit from actually running Amazon — was $27.5 billion, against $19.2 billion a year earlier, a rise of 43%. That is a real, cash-generating improvement and it is the figure worth anchoring on.

The driver is Amazon Web Services, the division that rents computing power to other companies. AWS sales rose 37% to $42.2 billion, which Amazon describes as its fastest growth in 18 quarters — roughly four and a half years — and an annualised revenue run rate of $169 billion. "Annualised run rate" simply means: if the business kept selling at this quarter's pace for a full year, that is what it would collect. Group net sales rose 20%.

The cost of that growth

Building the data centres behind AWS consumes cash before it earns any. Operating cash flow rose 33% to $161.4 billion over the trailing twelve months. Free cash flow — what is left after capital spending — was an outflow of $7.6 billion over the same period, driven mainly by a $66.1 billion year-over-year increase in that spending. So Amazon is generating enormous cash from operations and spending more than all of it on infrastructure. That is a deliberate trade, not a malfunction, but it is why a quarter this strong on profit can still show negative free cash flow.

What the company told investors about next quarter

Amazon guided third-quarter net sales to between $197.0 billion and $202.0 billion, growth of 9% to 12% against the same quarter last year. The company noted that excluding the timing of Prime Day in both years, the underlying growth rate would be nearly 400 basis points higher — a basis point is one hundredth of a percentage point, so that is close to four percentage points.

What the reaction has done

The measured session move is 2.01%. That is a far smaller reaction than the headline profit figure implies, which is consistent with the market pricing the operating result and the spending commitment rather than the Anthropic revaluation. A paper gain on a private stake does not change what the business earns next quarter.

What to watch next

Three dated items decide whether this holds: the third-quarter report against the guided $197.0 billion to $202.0 billion range, the trajectory of capital spending and whether free cash flow returns to positive, and any change in the carrying value of the Anthropic stake, which will move reported profit in either direction without the operating business changing at all.