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Amazon reported a double-digit increase in quarterly revenue as it began seeing gains from the “once in a lifetime opportunity” of generative artificial intelligence and strong advertising demand, sending its shares higher in after-hours trading on Thursday.

As companies rush to develop and deploy generative AI tools, they are increasingly demanding cloud capacity to store their data. That has created “an unusually large, perhaps once-in-a-lifetime opportunity” for Amazon’s cloud business, said Andy Jassy, ​​the company’s CEO.

Sales at Amazon Web Services, a crucial profit driver for the e-commerce group, rose 19 percent year-over-year to $27.5 billion. Jassy said AWS already had a “multi-billion dollar” AI business that was experiencing “triple-digit” revenue growth, although he did not provide specific figures.

The AI ​​rush has also involved significant capital expenditure. Amazon spent $22.6 billion on property and equipment this quarter, up from $12.5 billion a year earlier. “The faster we grow demand, the faster we have to invest capital in data centers and networking equipment and hardware,” said Jassy, ​​who estimates Amazon would spend $75 billion this year and next.

“Our customers, companies and shareholders will feel good about this long term that we are aggressively pursuing,” he added.

The Seattle-based e-commerce company’s total revenue rose 11 percent year over year to $159 billion, beating analyst estimates. Amazon expects net sales in the current quarter – including the holiday shopping season – to be between $181.5 billion and $188.5 billion, in line with analyst forecasts of $186.4 billion.

Net profit of $15.3 billion for the period was well above analyst estimates of $12.2 billion and up more than 50 percent from a year earlier, and revenue from Amazon’s advertising business rose 19 percent to $14.3 billion.

Amazon shares, which are up nearly 25 percent so far this year, rose 6 percent in after-hours trading, which would push the company’s market valuation past $2 trillion.

Amazon’s market capitalization has more than doubled in the past five years, driven by growing cloud and advertising businesses and growing margins in its core retail businesses. Wall Street reacted negatively to Amazon’s shrinking operating margins last quarter, but the company recovered from 10 percent to 11 percent in the current quarter.

The group is now looking at generative AI as the main source of future growth. Amazon, which recently called workers back to the office for five days a week, is in a fierce race with rival ‘hyperscalers’ Meta, Microsoft and Alphabet for a share of the booming AI market.

Generative AI is “cloud 2.0,” said Gary Robinson, partner at Edinburgh-based asset manager Baillie Gifford, an Amazon investor. The technology had the potential to dramatically reduce operating expenses and could ultimately create trillions of dollars in value, “expanding the total addressable market for hyperscalers by an order of magnitude,” he said.

But investors are also looking for evidence that the expenses will be recouped. Microsoft’s stock price fell 6 percent on Thursday despite reporting double-digit gains in quarterly earnings, after the company warned that AI spending would continue to rise and said growth in its cloud division had cooled in the current quarter.

Thanks to the results and those of Meta, US stocks suffered their worst day in almost two months on Thursday, with Big Tech companies dragging down the Nasdaq and S&P 500.