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

Summary

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

Podcast: Bloomberg Talks
Host: Bloomberg (Nathan Hager, Karen Moscow)
Date: July 30, 2026
Guests: Poonam Goyal (Senior Analyst, E-Commerce & Athleisure) & Anurag Rana (Senior Technology Analyst), both from Bloomberg Intelligence; Ed Ludlow (Host, Bloomberg Tech)

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Main Theme

This episode delivers instant analysis of Amazon’s latest quarterly results, with particular focus on Amazon Web Services (AWS) achieving its fifth consecutive quarter of cloud sales growth, surging demand for AI-driven services, and Amazon's growing in-house chip ambitions. The panel also discusses implications of Prime Day timing, the retail segment, and how Amazon is leveraging AI throughout its business.

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Key Discussion Points and Insights

1. Amazon’s Overall Performance and Prime Day Shift

• Broad-based strength: Both retail and cloud segments delivered strong numbers, with retail outperforming expectations.
  • Poonam Goyal: “The retail numbers are particularly good and that was expected because we had the prime day shift moving in from 3Q to 2Q.” [01:26]
• Prime Day impact: The shift of Prime Day into Q2 accelerated retail results and possibly affected advertising growth.
  • Prime Day now happens twice a year, not just once, pulling forward consumer spending, and prompting rivals (Walmart, Target, Best Buy) to run simultaneous promotions. [05:19]
• Guidance and expectations: Q3 net sales guidance (197–202B) fell short of analyst estimates (204B), likely from the Prime Day shift between quarters.
  • Poonam Goyal: “We don't know how much in dollar volume has moved into Q [2].” [01:56]
  • Online revenue beat expectations: 15% growth vs. 13.7% estimated. [02:01]

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

• Cloud growth: AWS revenue jumped 37% to $42.2 billion, beating analyst expectations and marking the fastest pace since Q4 2021.
  • Karen Moscow: “Amazon reported cloud computing revenue that beat analyst estimates. With booming demand for artificial intelligence services accelerating sales for the fifth straight quarter.” [07:08]
• Amazon’s special sauce in cloud:
  • Enterprise Focus: AWS is the largest public cloud provider with deep enterprise relationships, contrasting with Microsoft’s consumer-app dominance (e.g., ChatGPT on Azure).
    • Anurag Rana: “AI in the enterprise is Amazon’s bread and butter... when you think of enterprise adoption and AI, you really cannot think of anybody better than AWS.” [08:05, 10:43]
  • Anthropic partnership: Amazon is the preferred cloud provider for Anthropic, driving additional enterprise AI workloads.
• Homegrown Chips:
  • Amazon’s in-house silicon (e.g., Trainium) enables AWS to process AI workloads more cost-effectively, reducing reliance on Nvidia and supporting margin strength.
    • Anurag Rana: “All these big companies... are going to buy GPUs, Nvidia’s GPUs. If Amazon can figure out their workloads on their own chips, it saves them massive amount of money.” [03:19]
  • Chips business revenue run rate now at $25 billion, comparable to the AI business. [17:08]
    • Ed Ludlow: “The chips business has revenue run rate $25 billion… It is amazing how quickly they’ve kind of turned it around from the in-house R&D.” [17:08]
• Margin surprise:
  • Despite sizable investments, AWS margins increased rather than declined, catching analysts off guard.
    • Anurag Rana: "The biggest surprise for me was the margins. I would have expected margins to go down with all these investments. It actually went up.” [02:32]

3. Advertising and Retail AI Innovations

• Advertising surge:
  • 26% YoY growth in advertising—a step up from ~20% in prior quarters, likely benefiting from the timing of Prime Day. [04:22]
• AI-powered retail tools:
  • Amazon leverages AI via Alexa for Shopping, offering price tracking, instant purchasing, and personalized product searches.
    • Poonam Goyal: “When they introduced Alexa for Shopping… 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. …In the release… interactions and active users doubled over second quarter just with AI adoption.” [14:26]
  • Alexa-linked Prime shoppers spend 40% more per order when Alexa is involved, though the overall impact on Amazon’s financials remains marginal due to business scale.
    • Ed Ludlow: “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...” [15:19]
    • Poonam Goyal: “It doesn’t move the needle because you have to think about how big Amazon is… approaching $1 trillion in GMV this year.” [15:52]

4. Industry Context and Competitive Dynamics

• Comparison to other hyperscalers:
  • AWS’s size and enterprise traction distinguish it from Oracle and Google, while Google and Amazon’s chip advances may give them an edge over Microsoft longer-term. [02:32, 18:13]
  • Anurag Rana: “The big game... is going to be who has the lowest cost per token within all the hyperscale cloud providers.” [18:13]
• Market stickiness:
  • As enterprises build AI-native applications directly on AWS, revenue becomes “very difficult to take out and move elsewhere.”
    • Anurag Rana: “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.” [11:59]
• Customer concentration risk:
  • Demand from AI startups (Anthropic, OpenAI, etc.) is a driver, but questions remain on whether cloud commitments come from a broad base or a handful of large customers. [13:59]

5. Viewer/Listener Questions and Further Analysis

• Market share shifts and ‘stickiness’ of AI services:
  • The pie is growing; all big cloud players will win, but revenue depth depends on whether they host long-term applications or simply lease GPUs for model training. [11:59]
• Diversification of revenue sources:
  • Not all new cloud business is from ‘frontier’ model companies (i.e., OpenAI, Anthropic), but diversity is increasing and closely watched by analysts. [13:16]

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Notable Quotes and Memorable Moments

• Anurag Rana [02:32]: “Actually much, much better than what I would have expected… The biggest surprise for me was the margins. I would have expected margins to go down… it actually went up.”
• Karen Moscow [07:08]: “Amazon reported cloud computing revenue that beat analyst estimates… revenue jumped 37% to $42.2 billion.”
• Anurag Rana [03:19]: “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 give Nvidia that cash flow.”
• Ed Ludlow [17:08]: “The chips business has revenue run rate $25 billion…But it shows they’re moving pretty quickly on it.”
• Poonam Goyal [15:52]: “We’re approaching $1 trillion in GMV this year based on our estimates… So when we see these growth rates… it’s a big number to move.”
• Anurag Rana [11:59]: “If you are developing a brand new AI application today, if you pick one of these three or four cloud platforms, as those apps get bigger, you’re going to make money. So it’s a perpetual revenue stream.”
• Poonam Goyal [14:26]: “There 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… interactions and active users doubled over second quarter just with AI adoption and Alexa for Shopping.”
• Ed Ludlow [15:19]: “If there are shoppers on Prime who use Alexa, more than 40% more per order if they involve the AI in the transaction…”

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Timestamps for Important Segments

• [01:26] Prime Day shift and retail outperformance (Poonam Goyal)
• [02:32] AWS growth and margin surprise (Anurag Rana)
• [03:19] Importance of in-house chips (Anurag Rana)
• [04:22] Advertising growth and Prime Day impact (Poonam Goyal)
• [07:08] AWS revenue news and context (Karen Moscow)
• [08:05] What sets AWS apart in AI and cloud (Anurag Rana)
• [10:43] Margin and profit narrative for hyperscalers (Anurag Rana)
• [11:59] Market ‘stickiness’ of AWS and AI apps (Anurag Rana)
• [13:16] Cloud commitments and customer concentration risks (Anurag Rana)
• [14:26] AI and Alexa for Shopping in retail (Poonam Goyal)
• [15:19] Alexa for Shopping engagement metrics (Ed Ludlow)
• [17:08] Amazon’s chips business and run rate context (Ed Ludlow)
• [18:13] Chips’ role in hyperscale profitability (Anurag Rana)

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Conclusion

This fast-paced, analytically rich episode offers unique insight into how Amazon’s investment in cloud, AI, and silicon is transforming the company’s financial engine and industry positioning. The discussion emphasizes AWS’s enterprise dominance, the risks and rewards of Prime Day, and how Amazon leverages AI to both supercharge its retail business and differentiate its cloud offering. Despite formidable competition from Microsoft and Google, Amazon’s scale, technological depth, and ambition in chips make it a formidable leader as the cloud and AI markets expand at breakneck pace.

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Transcript

[Anurag Rana]

So like 100% of investors think that protection is important. Only about 70% of advisors are like talking to their clients about that.

[Karen Moscow]

Where do you think the disconnect is happening?

[Anurag Rana]

There's this huge differences that exist in terms of what advisors think they're talking about their clients, what clients are actually hearing.

[Karen Moscow]

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[Nathan Hager]

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[Karen Moscow]

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[Nathan Hager]

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

[Karen Moscow]

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 Poonam Goyal, she's Bloomberg Intelligence Senior analyst for E Commerce and Athleisure. And Anurag Rana, 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.

[Nathan Hager]

What's this third quarter net sales? Ms. 197 to 202 billion. The estimates were $204 billion. Punum.

[Poonam Goyal]

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

[Nathan Hager]

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 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 be part of the movement that we're seeing here in the guidance as well.

[Karen Moscow]

All right, Anurag, come on in on here. Let's talk about us. 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 237 in constant curr 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 margins 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?

[Nathan Hager]

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 mass massive amount of money and helps them recognize the big backlog that they have without having to, you know, give Nvidia that cash flow. I think that's one of the biggest differentiators between Google, Amazon and Microsoft Is, you know, that the first to have their own chips that people are embracing at a fast pace. Meanwhile, that's not the case with Microsoft.

[Karen Moscow]

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 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, did advertising dollars shift to 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.

[Nathan Hager]

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.

[Ed Ludlow]

Yeah.

[Poonam Goyal]

And now it's like holiday.

[Ed Ludlow]

Right.

[Nathan Hager]

A week.

[Poonam Goyal]

It's now twice a year. 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, they're essentially 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 Wal Mart, it's also Target, it's also Best Buy. Everyone is having their own version of deals around this day.

[Karen Moscow]

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' 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/askradio. Send them to bloomberg.com/ask radio and then you can certainly catch their answers live on air with us.

[Nathan Hager]

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 concerned. 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.

[Karen Moscow]

All right, so getting hammered, going in the other direction. Shares of AM continuing to rally our 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 lid 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 a lot of large companies around the world would be building their application or they would be infusing AI into their older application. 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 get air diffusion within companies.

[Nathan Hager]

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.

[Nathan Hager]

What sticks out to you?

[Ed Ludlow]

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.

[Nathan Hager]

What did you hear from the cfo?

[Ed Ludlow]

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

[Nathan Hager]

Which cfo? Which CFO were you talking to?

[Ed Ludlow]

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

[Nathan Hager]

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 anorac fan and so if I say something and he's like that's dumb, let him say it's dumb. 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?

[Karen Moscow]

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 it out. Can I find any mistakes over here? But we don't. And in fact, which is why I said, you know, 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% in the 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're nitpicking at this point, frankly.

[Nathan Hager]

Hey, 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 or 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 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.

[Karen Moscow]

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 Chachi Beat 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?

[Karen Moscow]

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 is 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 stage, it doesn't

[Poonam Goyal]

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 convers version. 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.

[Nathan Hager]

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, Runway 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?

[Karen Moscow]

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

[Anurag Rana]

Yeah, I think that's exactly what you know, it 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.

[Karen Moscow]

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