Amazon's cloud business experiences a 19% increase in revenue, surpassing expectations.

• Amazon Web Services reported a 19% increase in second-quarter revenue.
• During the quarter, Amazon appointed Matt Garman, a longtime executive, to replace Adam Selipsky as the head of the cloud unit.

In the second quarter, the cloud division of the company experienced a 19% increase in revenue, surpassing analyst predictions.

Analysts surveyed by StreetAccount had predicted Amazon Web Services' revenue to be $26.02 billion, but the company reported $26.28 billion.

Despite facing competition from and , AWS is growing faster than Amazon as a whole, as more businesses move their workloads to the cloud and increase their investments in AI.

In May, Amazon announced that Matt Garman would be replacing Adam Selipsky as CEO of AWS. Garman, who previously ran sales, marketing, and global services, had been vice president in charge of compute services, including EC2, which provides raw computing resources for software developers.

Azure and Google Cloud are gaining momentum in the cloud infrastructure market, with Microsoft reporting a 29% increase in revenue from Azure and other cloud services in the quarter, and Google reporting a 29% increase in cloud revenue, including cloud infrastructure and Workspace productivity subscriptions, last week.

Cloud services are being utilized by companies to deploy generative AI models that power technologies such as OpenAI's ChatGPT chatbot. Amazon has announced that it will increase capital spending in 2024, with a significant portion of that budget allocated towards purchasing graphics processing units (GPUs) for training and running generative AI models. The company believes that this investment will result in billions of dollars in revenue.

AWS generates 18% of its parent company's total revenue, but its contribution to profit is significantly greater.

AWS generated $9.3 billion in quarterly operating income, which is 63% of the companywide total, exceeding analysts' expectations of $8.51 billion.

AWS CEO Matt Garman believes that AI is more than just chatbots and we need to provide a variety of options.