Amazon shares surged 15.3% on Friday, recording their largest one day gain since 2012 after accelerating growth at Amazon Web Services eased concerns over the company’s massive AI spending plan.

The stock closed at $271.58 after Amazon reported second quarter results that exceeded expectations across revenue, operating profit, cloud computing, and advertising.

Quarterly sales rose 20% from a year earlier to $200.6 billion, while operating income climbed 43% to $27.5 billion.

AWS drove the market reaction. Revenue at the cloud division increased 37% to $42.2 billion, its fastest growth in more than four years and well above Wall Street expectations of about 31%.

AWS operating income reached $16.6 billion, up from $10.2 billion a year earlier and accounting for more than half of Amazon’s total operating profit.

The results helped ease concerns that Amazon was losing ground to Microsoft and Google in the cloud and AI infrastructure market.

Amazon said its AWS AI business and custom chip business had each surpassed annual revenue run rates of $25 billion, with both growing at triple digit rates.

The company has expanded its Trainium chip platform while securing infrastructure commitments from customers including Anthropic, OpenAI, Uber, and Pinterest.

Strong demand prompted Amazon to raise its expected 2026 capital spending by 10% to $220 billion.

CEO Andy Jassy said the company still lacks enough computing capacity to meet demand despite the higher spending plan. Most available AWS capacity for 2027 has already been reserved, while customers have also committed to capacity expected to come online in 2028.

AWS contract backlog rose to $496 billion at the end of the quarter from $364 billion three months earlier, suggesting much of Amazon’s planned infrastructure is supported by existing customer commitments.

The results marked a shift in how investors are evaluating the AI spending boom.

Meta and Alphabet recently faced negative market reactions after raising investment forecasts while reporting pressure on free cash flow. Amazon was rewarded despite announcing a larger spending plan because AWS delivered faster revenue growth and higher operating income.

Amazon’s own cash flow remains under pressure. Free cash flow over the past 12 months fell to an outflow of $7.6 billion from an inflow of $18.2 billion a year earlier, largely because of increased spending on AI infrastructure.

Jassy said Amazon begins investing in data centers about two years before they become operational, meaning costs rise well before the related revenue arrives. He added that AI servers can recover their cost in less than three years.

Amazon’s other businesses also contributed to the quarter. Advertising revenue rose 26% to $19.8 billion, North American sales increased 16% to $116.2 billion, and international sales grew 15% to $42.2 billion.