Amazon's stock rides booming cloud growth toward best day in 11 years

By Hannah Pedone

AWS 'finally saw the long-awaited growth inflection,' an analyst notes

Amazon posted about 37% growth in cloud revenue for the second quarter.

Amazon.com just delivered against high expectations for its cloud business - perhaps even more than the bulls could have imagined.

The result may be the best day for its stock in more than 11 years. Shares of Amazon (AMZN) are up 13.7% in morning trading on Friday. That would be their biggest one-session gain since April 24, 2015 if it holds through the close.

For Bernstein analyst Mark Shmulik, Amazon Web Services growth was the highlight of Thursday's report. Amazon's cloud business recorded $42.2 billion in revenue, beating analyst expectations, and reflecting growth of 36.7% from the prior-year quarter - its fastest growth in 18 quarters.

AWS "finally saw the long-awaited growth inflection," he wrote in a Friday note.

Evercore ISI analyst Mark Mahaney added that Amazon is at a "fundamental inflection point" with revenue growth accelerating. He wrote that Amazon Web Services is "coming through the capex digestion phase faster, and more profitably, than feared," a reference to how the company is translating its capital expenditures into financial opportunities.

Amazon CEO Andy Jassy said the cloud division could "very possibly" be on its way to becoming a $1 trillion business in terms of annual revenue. That said, the company still has a ways to go, as analysts project $169.7 billion in AWS revenue for the fiscal year 2026.

Getting back to the present day, AWS's performance and management's guidance were "better than anyone could have asked for," MoffettNathanson analyst Michael Morton wrote in a Friday note.

He wrote that historically, Amazon had stressed that AWS margins would fluctuate. But CFO Brian Olsavsky's latest commentary may have reflected a shift in tone, in his view.

"I would say that the profitability you're seeing from AWS isn't random. It's a result of discipline, efficiency gains, capacity optimization, which we benefited quite a bit from in Q2, and always closely managing our fixed costs," Olsavsky said on the earnings call.

See also: Nvidia's potential new deal with OpenAI would revive a spooky tech-bubble habit, analyst warns

-Hannah Pedone

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

07-31-26 1026ET