Instant Reaction: Amazon Reports Cloud Sales Growth for Fifth Straight Quarter

Summary

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Bloomberg Surveillance Podcast Summary

Episode: Instant Reaction – Amazon Reports Cloud Sales Growth for Fifth Straight Quarter

Date: July 30, 2026
Hosts: Bloomberg Surveillance team (notably Jonathan Ferro, Lisa Abramowicz, Annmarie Hordern, Tom Keene, Paul Sweeney)
Guests: Poonam Goyal (Bloomberg Intelligence Senior Analyst, E-Commerce & Athleisure)
Anurag Rana (Bloomberg Intelligence Senior Tech Analyst)
Ed Ludlow (Host, Bloomberg Tech)

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Overview of the Episode

This episode delivers an immediate, in-depth analysis of Amazon’s latest earnings report with a focus on its cloud computing segment, Amazon Web Services (AWS). The discussion centers on Amazon's continued retail strength, the acceleration in AWS’s growth driven by AI, operational efficiency, and the strategic importance of in-house chip development. The panel also compares Amazon’s performance and positioning with Microsoft and Google, explores the stickiness of enterprise cloud offerings, and considers the wider implications of Prime Day’s evolving calendar.

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Key Discussion Points & Insights

1. Amazon’s Retail and Cloud Strength

• Retail Growth:
  • Poonam Goyal highlighted that retail numbers were strong, attributed in part to the shift of Prime Day from Q3 to Q2, capturing consumer spend amid a tough environment.
  • Quote [02:36] – Poonam:

    “It looks like broad-based strength across the board. The retail numbers are particularly good… consumers came to Amazon to shop Prime Day sales and the shift to online just continues to appear more and more apparent as we move through a tough consumer spending cycle.”

• Prime Day Timing:
  • Retail sales beat expectations (online revenues up 15% vs estimated 13.7%), likely boosted by Prime Day’s earlier timing. Analysts weren’t clear how much of Q3 revenue “moved” into Q2.
  • Poonam:

    “We don’t know how much in dollar volume has moved into Q2. You could see the movement that we’re seeing here in the guidance as well.” [03:11]

2. Amazon Web Services (AWS): Growth, Margins, AI, and Chips

• Strong Cloud Performance:
  • AWS reported 37% growth, with revenue up to $42.2 billion versus analyst forecasts of $40.6 billion – fastest growth since Q4 2021.
  • Anurag Rana:

    “Going from to 37 in constant currency is phenomenal. Just because the size of this business is so large… That’s a very big beat frankly. And the biggest surprise for me was the margins. I would have expected margin to go down with all these investments. It actually went up.” [03:42, 04:29]

• AI and Chips as Differentiators:
  • Discussion on Amazon’s in-house chip development (Trainium) as a key to controlling costs and reducing dependency on Nvidia, separating AWS from Microsoft and Google.
  • Anurag:

    “If Amazon can figure out their workloads onto their own chips, it saves them massive amount of money… That’s one of the biggest differentiators between Google, Amazon and Microsoft…” [04:29]

• AWS’s Enterprise Edge:
  • Amazon’s advantage in enterprise AI workloads, as opposed to primarily consumer-facing approaches of Microsoft (e.g., ChatGPT).
  • Anurag:

    “The big difference is the enterprise presence… for Amazon that's primarily the bread and butter… the future of AI is enterprise adoption, Amazon has a lot of data, it has a lot of services. So it's right in the middle of this entire diffusion within companies.” [09:15]

  • Reference to preferred partnerships, such as with Anthropic, as a boon for AWS.

3. Sticky Revenue & Cloud Market Share

• Cloud Stickiness:
  • Anurag explained why cloud applications, particularly those built “natively” on AWS or similar platforms, are sticky revenue streams and unlikely to switch providers.
  • Quote [13:08]:

    “If you are developing a brand new AI application today… as those apps get bigger, you're going to make money. So it's a perpetual revenue stream. It's very difficult to take that out and move it somewhere else.”

• Market Share Dynamics:
  • The consensus is less on large swings in market share, more on the expanding total market pie for cloud and AI, meaning all hyperscalers will profit, but the type of revenue (application vs. infrastructure) is crucial.

4. Advertising and Retail AI

• Advertising Acceleration:

  • Amazon’s advertising segment grew by 26% (up from ~20%), possibly influenced by the Prime Day shift.
  • Poonam seeks further clarity:

    “Was that also led by the Prime Day shift?… Will we see that slow down a little in the next quarter? They’ve never quantified it, so we’re hoping to get some color.” [05:32]

• Expansion of Prime Day & Competition:

  • The event now runs twice a year, drawing not just Amazon but Walmart, Target, and Best Buy into competitive sales periods.
  • Poonam:

    “They’re essentially taking the dollars upfront and trying to get the consumers to spend it with them versus elsewhere… around Prime Day, it’s not just Amazon that’s striking with deals.” [06:28]

• AI in Retail Experiences:

  • Notable expansion of Alexa’s shopping integration, helping conversion rates and customer engagement.
  • Poonam:

    “When they introduced Alexa for shopping... it’s pretty clever... if it drops to that price, buy it for me... In fact, in the release I believe they said interactions and active users doubled over second quarter just with AI adoption and Alexa for shopping.” [15:36]

  • Ed Ludlow adds:

    “If there are shoppers on Prime who use Alexa, more than 40% more per order if they involve the AI in the transaction. I find that amazing.” [16:29]

  • But he also notes that, due to Amazon’s giant scale, this doesn’t yet significantly move the financials.

5. In-House Chips & Cost Efficiency

• Amazon’s “Bag of Chips”:

  • The chips revenue run-rate hits $25 billion, illustrating Amazon’s rapid in-house R&D progress and ability to compete with Google’s TPU and Nvidia, not just as a cloud provider but as a hardware innovator.

  • Ed Ludlow:

    “It's not them literally a bag of chips. Here you go. It's still them renting capacity specifically to their own silicon but to third-party customers... If Google gets all the credit for TPU, then should Amazon get some credit for those training chips too?” [18:17]

  • Anurag:

    “If customers are embracing Cranium (Trainium) along with Amazon cloud, it's really good for them because... they get to keep a lot of that gross margin that they don't have to pay Nvidia for those chips... Sooner or later the big game... is going to be who has the lowest cost per token within all the hyperscale cloud providers.” [19:22]

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Notable Quotes & Memorable Moments

• On AWS’s Margin Surprise:

  “I would have expected margin to go down with all these investments. It actually went up.”
  — Anurag Rana [03:42]

• On Stickiness of Cloud AI Apps:

  “It's a perpetual revenue stream. It's very difficult to take that out and move it somewhere else.”
  — Anurag Rana [13:08]

• On Alexa’s Impact on Shopping:

  “In fact, in the release I believe they said ... active users doubled over second quarter just with AI adoption and Alexa for shopping.”
  — Poonam Goyal [15:36]

  “If there are shoppers... who use Alexa, more than 40% more per order if they involve the AI in the transaction. I find that amazing.”
  — Ed Ludlow [16:29]

• On Silly AWS Mistake Hunting:

  “Can I find any mistakes over here? But we don’t. ... now we are really getting into, to be honest, 50 basis points here or 100 basis points here. You're nitpicking at this point, frankly.”
  — Anurag Rana [11:52]

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Timestamps for Key Segments

• 02:36 – Amazon's Q2 retail performance and Prime Day impact
• 03:42 – AWS beats expectations; margin surprise
• 04:29 – The significance of Amazon’s chip (Trainium) business
• 05:32 – Amazon’s advertising revenue growth
• 06:06 – Prime Day’s history, competitive impact, consumer spend
• 09:15 – AWS’s enterprise AI advantage over Microsoft/Google
• 13:08 – Stickiness of enterprise cloud offerings
• 15:36 – AI and Alexa’s growing role in retail
• 18:17 – Contextualizing Amazon’s in-house chips’ revenue

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Conclusion

This episode provided a robust, numbers-driven look at Amazon’s Q2 results with sustained AWS momentum (driven by AI demand), surprising margin expansion, and the rising importance of in-house chip development. Analysts express optimism on both the stickiness and future value of Amazon’s AI and enterprise-focused cloud approach, while retail and advertising segments demonstrate how Amazon uses data and AI for strategic advantage. The tone is one of cautious but clear enthusiasm, with the panel agreeing that Amazon’s optionality and operational execution currently leave little for critics to pick apart.

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Transcript

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[Bloomberg Host]

Bloomberg Audio Studio Radios Podcasts Radio News

[Bloomberg Host / Interviewer]

this is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.

[Bloomberg Host]

Shares of Amazon higher in the aftermarket let's get to it with our team. Two members, killer members if you will, of our Bloomberg Intelligence team. We're talking about Punam Goyal. She's Bloomberg Intelligence Senior Analyst for E Commerce and Athleisure and Anuragrana, Bloomberg Intelligence Senior Technology Analyst Put him Let me kick it off with you. In terms of Amazon, what's jumping out here for you?

[Poonam Goyal]

Look, it looks like broad based, broad based strength across the board. The retail numbers are particularly good and that was expected because we had the prime day shift moving in from 3Q to 2Q. So overall, really nice numbers. Here on the retail side, consumers came to Amazon to shop prime day sales and the shift to online just continues to appear more and more apparent as we move through a tough consumer spending cycle.

[Bloomberg Host / Interviewer]

What's this third quarter net sales miss 197 to 202 billion. The estimates for $204 billion. Puna.

[Poonam Goyal]

I think part of it is the prime day shift. Right. When you think about.

[Bloomberg Host / Interviewer]

But analysts knew about that, so they should have.

[Poonam Goyal]

But we don't know how much. Right. We don't know how much in dollar volume has moved into Q If you look at the beat that we saw, analysts were expecting revenues to be up, but they came in even higher than that. Right. 13.7% online revenues was the expectation and they came in at 15%. So a couple of billion dollars there could the movement that we're seeing here in the guidance as well.

[Bloomberg Host]

All right, Anurag, come on in on here. Let's talk about aws. What's doing pretty well to say the least.

[Anurag Rana]

Actually much, much better than what I would have expected. I mean going from to 37 in constant currency is phenomenal. Just because the size of this business is so large. I mean it's so much bigger than Oracle and so much bigger than Google. But that's a very big beat frankly. And the bigger thing, the biggest surprise for me was the margins. I would have expected margin to go down with all these investments. It actually went up. So you know, kudos to the US team and we look to hear more about guidance for next quarter and you know, how much longer can these margins hold up?

[Bloomberg Host / Interviewer]

Anurag, the AI and chips run rate, the Asia clips run rates of over $25 billion. Contextualize that for us. As Romain said, a division of a division with $25 billion run rates.

[Anurag Rana]

Yeah, I mean to be honest, I don't really care that much about the net number. The number of the chips is the one that I find it more exciting because here is the thing. All these big companies that are spending all this Capex, a large portion of that Capex is going to buy GPUs, Nvidia GPUs. If Amazon can go and figure out their workloads onto their own chips, it saves them massive amount of money and helps them recognize the big backlog that they have without having to spend. You know, given video that cash flow, I think that's one of the biggest differentiators between Google, Amazon and Microsoft is, you know, the first to have their own chips that people are embracing at a fast pace. Meanwhile that's not the case with Microsoft.

[Bloomberg Host]

Yeah, I think it's just fascinating. As I said, I don't always think about Amazon as a chip company, but you got to remember that they are doing this and increasingly these big tech guys are doing it. Put them. Come on back in here. Anything here? I know we're still getting information. There's still stuff we're going to get on the analyst call. Anything though, that you find is maybe something that's worth digging a little bit deeper into and asking about.

[Poonam Goyal]

I think the advertising business saw a nice pickup. Right. 26% growth rates this quarter is, is a step up from the close to 20% that they've been reporting for the past few quarters. Was that also led by the Prime Day shift? Given such a big event moved into the second quarter, advertising dollars shift too? And will we, will we see that slow down a little in the next quarter? So I'm really looking to better understand how this Prime Day shift affected and helped to queue across the board and what it really does to 3Q. They've never quantified it, so we're hoping to get some color.

[Bloomberg Host / Interviewer]

How, how big is Prime? Like how big is Prime Day? Because I know we know from a metrics perspective, but Prime Day kind of started a few years ago as this offshoot of, what was it? Alibaba? Doing Singles day. Is that what sort of inspired it years ago?

[Poonam Goyal]

I mean that could have, that could have inspired it. But you know, Prime Day was a once a year phenomenon.

[Bloomberg Host / Interviewer]

Yeah.

[Ed Ludlow]

And now it's like holiday a week.

[Poonam Goyal]

It's now twice a. Right. So it's really just a move to pull shoppers to spend earlier. So if you think about the timing of Prime Day, right this time they moved it into June, usually in July. So really capturing spend for back to school for these peak holiday moments where consumers are looking to stretch their dollars. They're essentially taking the dollars upfront and trying to get the consumers to spend it with them versus elsewhere. Does that happen? Yes and no. Because around Prime Day, it's not just Amazon that's striking with deals. It's also Walmart, it', Target, it's also Best Buy. Everyone is having their own version of deals around this day.

[Bloomberg Host]

Anything to get us to buy. I know how that works. Hey, just a reminder, everybody. We're talking with Putam Goyal, Bloomberg Intelligence Senior Analyst for E Commerce, and Athleisure Anuragrana, Bloomberg Intelligence Senior Technology Analyst joining us. If you have a question, let us know. We'd love to bring you into the conversation for Those who are Bloomberg.com subscribers and Terminal clients, ask a question of our panelists. Just submit questions for our team to answer live on air bloomberg.com/ask radio send them to bloomberg.com/askradio and then you can certainly catch their answers live on air with us.

[Bloomberg Host / Interviewer]

Hey, I want to just look at shares of Roblox real quick. The gaming company down about 11% in the after hours. Just taking a look at what exactly is happening. Second quarter daily active users came in below estimates 123 million. The estimates for 128.7 million million users. That was really that what missed the average analyst estimate and that is what has has investors bookings came in a little shy hours engaged came in shy. Revenue did come in higher than expected though. A loss per share at $0.26. The estimate was for a loss percent at $0.34 loss per share rather shares down 11 and a half percent in the after hours.

[Bloomberg Host]

All right, so getting hammered going in the other direction. Shares of Amazon continuing to rally. Are Spencer Soper out with his story? Amazon reported cloud computing revenue that beat analyst estimates. With booming demand for artificial intelligence services accelerating sales. For the fifth straight quarter, revenue jumped 37% to 42.2 billion. At Amazon Web Services, which generates about a fifth of the company's revenue and most of its operating profit, it was the fastest pace of growth since the fourth quarter of 2021. Analysts on average forecast sales of 40.6 billion, according to data compiled by Bloomberg. You know Anurag, you have Amazon against the other hyperscalers. What is it that's unique? I mean you talked a bit about the chips and that certainly kind of keeps a L on some of their costs in their access situation. Among the chip demands that we've seen out there. But what is it? What is the special sauce of Amazon?

[Anurag Rana]

So the first and foremost, it is the largest public cloud provider. It has a much longer history of working with enterprises. So remember when we talk about AI adoption, you think about ChatGPT app. It's primarily hosted on Microsoft Azure. That's a consumer app. But now you think about AWS and enterprise AI adoption. That's where where a lot of large companies around the world would be building their application or they would be infusing AI into their older applications. So that's a big difference is the enterprise presence as well as the and you know for the Microsoft is on the consumer side. Microsoft does both. But for Amazon that's primarily the bread and butter. The other thing is they're also the key or the preferred cloud provider for Anthropic. And we have seen a massive boost in Anthropic's use for coding agents. And I think that's also helping AWS in that case. And then if you think, you know, the future of AI is enterprise adoption, you know, Amazon has a lot of data, it has a lot of services. So it's right in the middle of this entire, I would say diffusion within companies.

[Bloomberg Host / Interviewer]

I want to bring in Ed Ludlow to the conversation. He's the host of Bloomberg Tech out there in San Francisco. Ed, what sticks out to you? Amazon's numbers up. The stock up 8.9% in the after hours.

[Ed Ludlow]

Yeah, what sticks out to you? You and Anurag will forgive me because I missed the first part of your conversation. I was on the phone with the cfo, but I mean this is a beat on every metric where us absolutely matters most. You know, 37% growth against street expectation of 31%. You know, it's a pretty straightforward set of numbers where, you know, they will be peppered with questions on the call for the same magic formula that we discussed in the last few afternoons. Capital expenditure, direction of travel and other points of tangible evidence that the AI from Amazon is gaining traction in its different guises.

[Bloomberg Host / Interviewer]

What did you hear from the cfo?

[Ed Ludlow]

That as in I spoke to the CFO of a different company.

[Bloomberg Host / Interviewer]

Which cfo? Which CFO were you talking to?

[Ed Ludlow]

Sorry, I was talking to the. I was talking to the Rivian.

[Bloomberg Host / Interviewer]

Okay, we're going to get to that later. Okay, great.

[Ed Ludlow]

But yeah, like again, you know, an anorak, like I'm such a massive anorak fan. And so if I say something and he's like that's dumb, let him say it's dumb. But you know, operating income also like a huge beat. And you know, if the concern of the market for the hyperscalers is that they want to see free cash flow and profit and a commitment to spend and continue top line growth, they kind of got all of that. There's not a lot left to complain about. Is there an Iraq?

[Bloomberg Host]

You want to come in on that?

[Anurag Rana]

No, I absolutely agree with that. In fact, that's what I was trying to figure out. Can I find any mistakes over here? But we don't. And in fact, which is why I said when you think of enterprise adoption and AI, you really cannot think of anybody better than AWS because of given that how much of world applications they house already within their ecosystem. So the big question now is how much they have to spend for the next 12 months to get this kind of rate going. We saw the AWS growth rate jump to 37% next quarter. Is it going to be faster than that or do we see some moderation in that? So now we are really getting into, to be honest, 50 basis points here or 100 basis points here. It's a, you know, you're nitpicking at this point, frankly.

[Bloomberg Host / Interviewer]

We're getting some questions from viewers and listeners around the world. Just a reminder, subscribers to bloomberg.com and terminal subscribers can ask questions bloomberg.com askradio I want to throw this one. This is from Connor in Auckland, New Zealand. Thanks for staying up late. I guess early in the morning for us. Connor Microsoft and Amazon are making good progress in enterprise AI. How sticky are their product offerings? Will there be big swings in market share going forward? Anurag I think this is a good question for you.

[Anurag Rana]

So the way we think about it is the pie is growing at such a fast pace, they will all make money. I'm fairly confident about it. But the question is what kind of money they will be making. Are they making money renting GPUs and training models or are you building AI applications on top of it? We like the second kind of business better because in the long run it's very difficult to take it off. So let's say go back 20 years, 15 years. If Lyft or Uber started their application on AWS, that's a cloud native application. As the application is growing, AWS makes more money. If you are developing a brand new AI application today, if you pick one of these three or four cloud platforms, as you, as those apps get bigger, you're going to make money. So it's a perpetual revenue stream. It's very difficult to take that out and move it somewhere else. But if you're only training models, that's a very different revenue stream.

[Bloomberg Host]

Yeah, it's interesting too because I was just looking at Spencer Soper, the story that he's got on the Bloomberg Terminal or Bloomberg Spencer Soper. He says the company lacks a hit consumer AI product on par with OpenAI's ChatGPT and Anthropics Claude but has ink deals committing both air labs to spend at least $100 billion in services from the Amazon Web Services cloud unit in the coming years. I mean Anurag, that's a big deal.

[Anurag Rana]

Yeah. So one of the things Microsoft said yesterday was the sequential increase in commercial real performance obligations or the backlog that they had. I think it was about 45 billion. All of that was from non frontier model companies, which is, that is not anthropic, that is not OpenAI because remember, what is the biggest fear right now in the market is what if OpenAI is not able to take care of the commitments or anthropic and so forth. But what they are saying is the business now they're coming in, in their backlog or in their bookings is from non frontier models. And that's really, I think one of the most important questions that we want to ask the company today is if they talk about cloud commitments, where are those cloud commitments coming in? Is it the three or four companies or is it more diversified?

[Bloomberg Host]

Right, exactly. In terms of exposure to maybe just a few big customers. Poonam, I want to bring you back. We talk so much about aws and I know we do that with you as well. It's so important in terms of what really makes money for Amazon. But you think about, I mean, they sell a lot of stuff. So many of us relate to Amazon as a retailer. How do they think about increasingly using AI to kind of juice the numbers and maybe improve the profitability on the retail side of things?

[Poonam Goyal]

Yeah, I has been a big push on the retail side and actually I think Amazon does the best better than anyone. When they introduced Alexa for shopping, for example, Alexa plus, it's pretty clever. You know, you go to the search bar, you can compare pricing, you can say, I'm looking for this item and when was it priced cheapest and if it drops to that price, buy it for me. I mean, just that simple and it'll show up at your door. So I do think that they're gaining traction there. In fact, in the release I believe they said that interactions and active users doubled over second quarter just with AI adoption and Alexa for shopping. So they're making momentum here. We do think that the investments that they make in Alexa for Shopping and AI will continue to not only help them with customer service and conversion online, but also improve margins on the retail side, which are slim to none, as you know.

[Ed Ludlow]

I find that data so amazing. I didn't know you were with us. It's so good to see you. By the way, every morning when I wake up for Bloomberg Surveillance, it's because my Echo device works. I ask Alexa to set an alarm and it's, it's very reliable for that. But for ages I've been thinking, what am I going to use this for? The data you're pointing to is amazing though. Alexa for shopping, right? If there are shoppers on prime who use alexa more than 40% more per order if they involve the air in the transaction. I find that amazing. But it doesn't move the needle on the financials, right, for Amazon at this

[Poonam Goyal]

stage, it doesn't move the needle because you have to think about how big Amazon is, right? We're approaching $1 trillion in GMV this year based on our estimates. So that's a sizable number. So when we see these growth rates with the online business up 15%, it's a big number to move. That said, I do think it does move the needle on conversion. I do think the Alexa for shopping is helping its prime customers more notably really engage and purchase things even quicker. Because now you're just talking to someone, you're talking to this agent and you're setting expectations on what you want and things will just show up to your door. So now you don't need to go back and keep going back to see, okay, did the price drop? Is this the best price? Is this what I need? Do I need something else? It's doing the work for you. So I do think over time that will help boost sales and really help Amazon continue to maintain its lead in the online world.

[Bloomberg Host / Interviewer]

I want to throw one to add and back to the technology side of things and I want to talk a little bit about the company's chips business. We got some data about annual revenue run rates. Anurag said he's not as interested in the AI side of it. He's more interested in the chip side of it. But me too, you know, they've got, what is it? The Trainium. Is that what they're talking about here?

[Ed Ludlow]

Well, it's multifaceted, but the chips business has revenue run rate $25 billion, as does the AI business. It's a run rate figure, but it is amazing how quickly they've kind of turned it around from the in house R and D to like they got a lot of questions from what's the point of training, like who's using it. They had a lot of early success with saying Anthropic will use Trainium. But Anthropic quickly followed up with some big TPU deals. $25 billion. You know, for context, AMD did $35 billion of revenue, all told, in its last fiscal year and it's likely to do $50 billion this year. But it shows they're moving pretty quickly on it, you know, across those. It's not them literally a bag of chips. Here you go. You know, it's still them renting capacity specifically to their own silicon but to third party customers. And like, yeah, you know, if Google gets all the credit for tpu, then should Amazon get some credit for, for those training chips too?

[Bloomberg Host]

Some would say yes. We were talking about Anara, come on back. We were talking about chips with you and Amazon earlier.

[Anurag Rana]

Yeah, I think that's exactly what you know, Ed is talking about here because remember, it's the capex side of it also that's important. First of all, if customers are embracing Cranium along with Amazon cloud, I mean it's really good for them because guess what, they get to keep a lot of that gross margin that they don't have to pay in video for those, those chips. So I think sooner or later the big game in this case is going to be who has the lowest cost per token within all the hyperscale cloud providers. And that's where Google and Amazon may have a leg over Microsoft.

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