Amazon’s AI Ambitions Face Investor Scrutiny Despite Strong Earnings

Amazon delivered a robust second-quarter 2025 performance that surpassed Wall Street’s forecasts, yet found itself facing investor skepticism. The market’s negative response highlights growing concerns about whether the tech giant’s massive artificial intelligence investments will ever generate meaningful returns.

Strong Results Overshadowed by Cloud Concerns

The e-commerce and cloud computing behemoth reported revenue of $167.7 billion, representing a 13 percent increase, while earnings per share of $1.68 comfortably exceeded analyst expectations. However, investor attention quickly shifted to the disappointing performance of Amazon Web Services (AWS), which grew at just 17.5 percent. This growth rate significantly trails behind competitors Microsoft Azure, which expanded by 39 percent, and Google Cloud, which posted 32 percent growth.

This performance gap has raised serious questions about Amazon’s competitive positioning in the rapidly evolving AI-driven cloud market. Despite CEO Andy Jassy’s emphasis on AWS’s “significant leadership position,” investors remained unconvinced, particularly after the company issued a disappointing profit forecast for the upcoming third quarter.

The $100 Billion Question

At the heart of investor concerns lies Amazon’s substantial capital allocation toward artificial intelligence infrastructure. The company is channeling up to $100 billion into AI-related data centers, computing resources, and software development without yet demonstrating a clear return on this investment. These substantial expenditures contributed to a decline in free cash flow, which fell to $18.2 billion.

Should investors sell immediately? Or is it worth buying Amazon?

While Amazon showcased several AI innovations, including its DeepFleet system for robotic operations and new generative AI features for e-commerce platforms, market participants are demanding tangible financial results rather than technological promises.

The AI Investment Dilemma

The market’s reaction reflects broader skepticism about when massive AI investments will begin translating into proportional revenue growth and improved profit margins. For Amazon, this question carries particular urgency as its core AWS business appears to be losing ground to rival cloud platforms.

Despite the current market pessimism, approximately 94 percent of analysts maintain buy recommendations on Amazon shares. However, the stock is likely to remain under pressure until the company can demonstrate that its AI strategy is yielding measurable financial benefits. The upcoming quarterly results, scheduled for release in late October, will serve as a critical test of whether Amazon’s AI investments are beginning to pay off.