Investors love AI, as long as you’re a cloud host
Amazon reported better-than-expected second-quarter earnings, driving a 10% rise in its stock price, with cloud revenue playing a key role in the growth. The company increased its capital expenditures, but it has tapped into its cash reserves to cover costs, resulting in negative free cash flow. AWS revenue rose 37%, reflecting growing demand and supply, while AI initiatives like the Trainium TPU and Graviton processor contribute to improved margins without affecting capex figures. Investors remain skeptical about the long-term viability of AI labs and startups, treating cloud hosting as the most reliable part of the AI stack.
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