Amazon shares fell more than 7% on Friday in European trading after the company posted second-quarter results that exceeded analysts’ revenue expectations but disappointed investors with slower growth in its cloud division, Amazon Web Services (AWS), and a cautious profit outlook.

The drop followed a similar 7% decline in after-hours trading on Thursday, despite Amazon stock closing the regular session up 1.7% at $234.11.

In the second quarter, Amazon’s revenue rose 13% year-over-year to $167.7 billion, surpassing the average analyst estimate of around $162 billion. Net income increased by more than one-third to $18.2 billion, reflecting strong operational performance across its core business lines.

Still, investors reacted negatively to the company’s forecast for the current quarter. Amazon projected operating income in the range of $15.5 billion to $20.5 billion, with the lower end falling short of Wall Street’s expectations, which averaged $19.4 billion.

The main concern was AWS, Amazon’s long-dominant cloud platform. AWS revenue increased by 17.5%, roughly in line with market expectations but significantly below growth at competitors. Microsoft Azure posted a 39% year-over-year increase in cloud revenue, while Google Cloud grew nearly 32%.

All three cloud giants are investing heavily in data center expansion to support rising demand for artificial intelligence capabilities. Amazon disclosed capital expenditures of over $31 billion in Q2, with chief financial officer Brian Olsavsky stating that investment would continue at a similar pace in the second half of the year.

This raised concerns among investors about whether Amazon’s aggressive infrastructure spending is delivering sufficient returns. Despite being the global leader in cloud services, AWS is facing increasing pressure from Microsoft and Google in the race to lead AI-powered cloud infrastructure.

Amazon CEO Andy Jassy defended the company’s strategy during a call with analysts, saying AI adoption is still in its early stages. He emphasized Amazon’s focus on offering lower operating costs for clients deploying AI software and acknowledged that demand is currently outpacing AWS’s ability to scale.

In response to questions about tariffs introduced under former U.S. President Donald Trump, Jassy said it remains unclear who will ultimately bear the cost. He added that Amazon has not seen any significant decline in demand during the first half of the year, even though many goods sold on its U.S. platform are imported and subject to tariffs.

FashionNetwork.com with Reuters and dpa