Investing.com -- Amazon.com shares traded down 1% after-hours on Wednesday evening after the company’s record-breaking quarterly profits were met with a significant ramp-up in infrastructure spending. The technology giant reported earnings per share of $2.78, which crushed the analyst consensus of $1.63, while revenue of $181.5 billion also cleared the $177.13 billion Street estimate.

The focal point of the release was a 28% growth rate at Amazon Web Services, signaling a major re-acceleration for the cloud division. Chief Executive Andy Jassy noted the momentum by stating, “AWS is growing 28% (our fastest growth in 15 quarters) on a very large base, our chips business topped a $20 billion revenue run rate (growing triple digits year-over-year), Advertising grew to over $70 billion in TTM revenue, and unit growth in our Stores reached 15% (the highest since the tail end of covid lockdowns).”

Investors appeared to be balancing the record operating income of $23.9 billion against a sharp contraction in free cash flow. This metric dropped to $1.2 billion for the trailing twelve months, a decline that was “driven primarily by a year-over-year increase of $59.3 billion in purchases of property and equipment, net of proceeds from sales and incentives.”

In the first quarter alone, purchases of property and equipment surged to $44.2 billion. This figure represents a nearly 77% increase from the $25.0 billion spent in the prior year’s first quarter, exceeding the expectations of analysts who had signaled caution over the speed of infrastructure expansion.

The company’s massive investment in proprietary silicon reached a new milestone as its chip business exceeded a $20 billion annual revenue run rate. Jassy highlighted other internal successes, saying, “We also hit exciting milestones with delivery speed (more than 1 billion items same-day or overnight in 2026 and counting), Project Hail Mary (nearly $615 million at the box office to date and the second most successful non-sequel, non-franchise opening of recent memory), and Amazon Leo continues to resonate with prospective customers, with Delta Airlines the latest to sign on.”

While the stock moved slightly lower, the core retail business remained a bright spot with North America segment sales rising 12% to $104.1 billion. This growth allowed the division to expand its operating margin to 7.9% even as the company absorbed a $1 billion headwind from its satellite-based internet project.

Management provided second-quarter revenue guidance between $194 billion and $199 billion, which remains above the $189.15 billion analyst consensus. The company expects operating income to range from $20 billion to $24 billion, indicating that the core business continues to generate enough cash to fund its $200 billion long-term investment cycle.

Reflecting on the scale of the current technological transition, Jassy expressed confidence in the company’s aggressive capital allocation strategy. He told shareholders, “We’re in the middle of some of the biggest inflections of our lifetime, we’re well positioned to lead, and I’m very optimistic about what’s ahead for our customers and Amazon.”

The mild stock market reaction suggests that while investors are impressed by the AWS recovery, they remain wary of the capital-intensive nature of the AI race. As the company continues to spend on infrastructure, management asserted, “We’re making customers’ lives easier and better every day across all our businesses, and their response is driving significant growth.”