Amazon.com Inc (AMZN) - Stock report

Amazon.com Inc. runs online stores, a marketplace for independent sellers, an advertising business, and Amazon Web Services, its cloud-computing arm that rents computing power and storage to other companies over the internet. Shoppers pay when they buy products, and Prime members pay a recurring subscription for faster delivery and other benefits. Independent merchants pay Amazon fees to sell, store, and ship their goods through its network. Advertisers pay to appear around shopping activity. Businesses and developers pay AWS based on how much computing they use. Together, these businesses give Amazon several ways to earn from consumers, merchants, advertisers, and enterprise customers.

Amazon is spending heavily to build artificial-intelligence computing capacity. Over the trailing twelve months, purchases of property and equipment rose by $66.1 billion, and the cash left after investment turned negative: free cash flow, the money remaining once operating needs and property investment are paid, was an outflow of $7.6 billion, versus an inflow of $18.2 billion a year earlier. That spending decides whether future cloud demand pays off.

At the same time, the everyday business is more profitable. Second-quarter operating income rose 43% to $27.5 billion on net sales of $200.6 billion, up 19.6%. The open question is whether today's spending becomes tomorrow's durable profit.