Amazon is set to report earnings after the bell. CNBC’s MacKenzie Sigalos joins 'The Exchange' to discuss its recent AI spending spree as well as what to expect from its earnings.

Amazon is set to invest over $100 billion in capital expenditures this year, marking its largest investment to date. The majority of this spending is directed toward AWS infrastructure, including in-house chips and data centers, as Amazon competes with Microsoft and Alphabet in the race for AI cloud leadership.

While AWS remains Amazon's most profitable segment, its growth is lagging behind rivals, with expected revenue increases falling short of those reported by Google Cloud and Microsoft Azure. Analysts are closely watching for signs of accelerated growth in AWS, particularly as generative AI workloads increase and partnerships, such as with Anthropic, begin to show results.

Amazon's AI spending spree in focus ahead of earnings

Meantime, Amazon also reports after the bell today, shares higher into the print by more than one percent. And like Google and Microsoft, AI capital expenditure is one of the key numbers to watch for in this MAG7 name. Our Mackenzie Segalos joins me now with more, Mack. Hey, John. So Amazon is on track to pour more than $100 billion into CapEx this year, its most investment heavy year ever. It's part of a hyperscaler arms race. Microsoft just pushed its total above that level after the close on Wednesday. And Alphabet recently boosted its spend to $85 billion as all three fight for share in what's become a tightly contested race for AI cloud dominance. Citi estimates that about three quarters of Amazon's capital is going into AWS infrastructure, including its in-house chips and massive data center build out. And that is the big focus heading into the print. You've got AWS, which remains Amazon's profit juggernaut, delivering over 60 percent of operating income last quarter with margins that are triple the company average. But even as that cloud leader, it is growing much slower than its rivals. Q2 revenue is expected to rise about 17 percent compared with Google Cloud's 32 percent growth. Microsoft just disclosed $75 billion in Azure revenue for fiscal 2025, up 34 percent year over year, helping push its market value past $4 trillion. And all of that puts pressure on Amazon to show that AWS can reaccelerate and capture the next wave of cloud spending as generative AI workloads ramp up, with analysts also looking for signs that its partnership with Anthropic is starting to pay off. John? Yeah, that's an important partnership.

Trump administration special envoy Steve Witkoff will visit Gaza with U.S. Ambassador to Israel Mike Huckabee to assess claims of starvation in the enclave at the center of Israel's war against Hamas.

Jerusalem

Middle East Conflict

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Ljubljana

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New York

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Kyiv

Ukraine Invasion

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Ottawa

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Washington

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Canberra

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Birmingham

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Hawaii

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London

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Bogotá

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Moscow

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Zaporizhzhia

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