Investors Love AI, as Long as You’re a Cloud Host

Amazon reported better-than-expected Q2 earnings on Thursday with net sales up 20% and AWS revenue soaring 37% year over year to $42 billion. The company spent $173 billion on property and equipment over the past fiscal year, including GPUs and data center infrastructure, and raised its 2026 capex forecast to $220 billion despite dipping into cash reserves. CEO Andy Jassy stated that AWS and Amazon Bedrock can succeed without a frontier model, emphasizing that no single model will dominate. Amazon is also investing in custom chips like Trainium and Graviton. This trend mirrors Microsoft and Google, whose shares rose after strong cloud earnings, while Meta's stock fell 8% due to high capex without clear AI revenue. Investors currently view cloud hosts as the most reliable part of the AI stack, but this revenue depends on sustainable spending by AI labs and their clients.