An increase in Amazon Web Services spending cut into the cloud giant’s profits in the second quarter as AWS raced to meet demand for AI against Microsoft, Google, and others.

Amazon.com Inc. projected operating income in the current quarter that fell short of analysts’ estimates, worrying investors that the tech giant is spending too much to keep up with competitors in the race for artificial intelligence.

The tech giant expects total net sales to be between $174.0 billion and $179.5 billion in the third quarter, compared with analysts’ average estimate of $173.08 billion.

Follow-up: Amazon Web Services profits squeezed as AI arms race drives spending surge Amazon beat estimates for its second-quarter earnings with $167.7 billion in revenue, up 13% year-over-year, and earnings per share of $1.

Amazon’s (AMZN) latest earnings report provides insight into the company's various branches and subsidiaries, including Amazon Web Services. AWS has been a huge revenue-driver for years, and this quarter is no different.