Amazon rallies after highlighting massive upside for the Trainium chips business

Amazon (AMZN.OQ) rallied in after-hours trading after management highlighted substantial upside for its Trainium AI chips business, easing investor concerns about the company’s heavy AI-related spending. The stock swung higher after an initial decline as the market weighed the tradeoff between near-term cash outflows and long-term AI revenue potential. Free cash flow plunged about 95% year-over-year to $1.2 billion, underscoring the near-term cost impact. Despite that, shares were modestly higher in postmarket trade and the company’s large market cap and double-digit revenue growth kept investors focused on the long-term AI opportunity rather than the short-term cash hit.