For Amazon and its CEO Andy Jassy, the past week has been nothing short of a rollercoaster ride. The tech giant kicked off the week with historic layoffs and skepticism over its AI strategy, only to stage a swift rebound days later with a strong earnings report—culminating in record-high stock prices and renewed investor confidence.

**Dark Clouds: Layoffs and AI "Lagging Behind" Concerns** Before Thursday’s earnings release, market sentiment was notably pessimistic. On Tuesday, Amazon announced 14,000 job cuts, fueling concerns about its corporate culture and AI capabilities. Top Wall Street analysts had already labeled Amazon an "AI laggard," while CEO Andy Jassy’s year-long push to streamline operations and reduce bureaucracy had yet to deliver stronger returns for shareholders. Investor anxiety centered on AWS’s slowing growth. Despite its revenue base dwarfing competitors, AWS’s expansion trailed behind Microsoft and Google’s cloud divisions. CFRA bluntly stated in a recent report: "AWS revenue reacceleration is a must."

**Earnings Rebound: AWS and AI Progress Boost Confidence** Thursday’s earnings report became Amazon’s strongest counterpunch. AWS sales hit $33 billion, up 20% year-over-year—the fastest growth since 2022. The company also highlighted positive AI developments, including robust demand for its in-house AI chips and software, directly addressing fears of falling behind in the AI race.

- The custom AI chip **Trainium 2** has become a "multi-billion-dollar" business. - AI shopping assistant **Rufus** could indirectly drive over $10 billion in sales. - AWS’s backlog of committed-but-unrecognized revenue surged to $200 billion.

Jassy declared during the earnings call: "AWS is gaining momentum." William Blair called this "a critical step in reclaiming the narrative." Baird analyst Colin Sebastian noted: "Jassy’s strategy is proving successful, though some fine-tuning remains." Wall Street reacted swiftly, with Evercore’s Mark Mahaney stating: "AWS’s potential is unlocking," while Barclays noted: "The past 48 hours have significantly eased market concerns."

**Beyond Earnings: AI Infrastructure Milestone** Alongside stellar earnings, Amazon’s AI infrastructure hit a key milestone. AWS’s **Project Rainier** data center is now fully operational, training Anthropic’s Claude model with nearly 500,000 Trainium 2 chips (expected to double to 1 million by year-end)—making it one of the world’s largest AI training systems. This signals Amazon’s shift from AI infrastructure planning to execution.

Morgan Stanley projects AWS revenue growth of 23% and 25% over the next two years, while Bank of America estimates Anthropic alone could add $6 billion to AWS by 2026.

**Challenges Ahead: Catching Up and Streamlining** Despite the rally, doubts linger. DA Davidson’s Gil Luria pointed out AWS still trails Microsoft and Google Cloud in AI "mindshare," with much ground to cover. Notably, Jassy sidestepped questions on AI’s exact contribution to AWS growth. Moreover, whether layoffs are over remains unclear. Jassy emphasized the cuts were for "cultural alignment," not cost pressure or AI, hinting at further organizational adjustments: "Staying lean, flat, and fast-moving is crucial—and that’s what we’ll do."