Amazon.com Inc. shares surged the most since 2012 after the company reported accelerating cloud-computing revenue, easing investors’ concerns that it won’t produce a return on huge expenditures to meet the booming demand for artificial intelligence.

Revenue jumped 37% to $42.2 billion at Amazon Web Services, which generates about a fifth of the company’s revenue and most of its operating profit. It marked the fifth consecutive period of rising sales at AWS and the fastest pace of growth since the fourth quarter of 2021. Analysts, on average, forecast sales of $40.6 billion, according to data compiled by Bloomberg.

Like its Big Tech peers, Amazon is spending heavily on data centers and chips in an effort to take advantage of rising demand for AI and cloud-computing services. The company reported spending more than $53 billion on property and equipment, including proceeds from some sales, in the period ended June 30.

Amazon raised its projection for 2026 capital expenditures to $220 billion from a previous estimate of $200 billion. Chief Executive Officer Andy Jassy said most of that spending would go toward AI.

“We’re unusually well-positioned for this AI inflection,” Jassy said during a conference call after the results were released.

Those outlays sent free cash flow negative, with Amazon reporting an outflow of $7.6 billion for the trailing 12 months at quarter’s end.

Despite the higher capital spending and negative cash flow, “investors may be unlikely to blink, however, given the accelerating pace of AWS revenue growth and strict cost controls in other areas,” Sky Canaves, an analyst at Emarketer, said in a statement.

Jassy said Amazon’s investments would moderate over time because it’s currently building data centers from the ground up. The sites will last 30 years while the equipment inside will have to be updated every five to six years. So future investments in modernizing the capacity being built this year won’t be as much, he said.

Amazon shares rose 15% to $271.58 at the close Friday in New York, the biggest one-day jump since April 2012. The stock had gained just 2% this year through Thursday’s close before the results were released.

Rival Microsoft Corp. on Wednesday reported the fastest cloud growth since 2022 and indicated it would hold the line on new capital spending this year. The shares soared Thursday the most in a single day since 2008. Alphabet Inc. stock declined last week after the company reported heavier spending than anticipated and negative free cash flow for the first time since it went public more than two decades ago.

In the second quarter, total revenue increased 20% to $200.6 billion, Amazon said Thursday in a statement. Analysts, on average, projected $197 billion.

Amazon’s AI and chips businesses both reached new milestones of $25 billion annual run rates, with each growing by triple-digit percentages year-over-year, the company said.

The company projected sales in the current quarter of $197 billion to $202 billion. Operating income will be $22.5 to $26.5 billion. Analysts, on average, estimated profit of $25.1 billion on revenue of $203.9 billion.

Amazon’s e-commerce operation still generates the biggest share of the company’s revenue, and Jassy continues to push faster delivery times to online shoppers. Online sales increased 15% to $70.4 billion in the quarter, compared with analysts’ average estimate of $69.9 billion. Amazon held its annual Prime Day sale in June, which spurred online spending of $26.4 billion across all U.S. retailers, according to estimates from Adobe Inc.

The company also reported it received $600 million in tariff refunds in the quarter. Some of that money will be returned to consumers, Chief Financial Officer Brian Olsavsky said.

—With assistance from Matt Day.

(Updates with closing shares in the ninth paragraph.)

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