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.

Amazon's stock sank on Thursday afternoon, weighed down by mixed guidance and AI competition, though the company beat Q2 earnings expectations.

With headcount inching up to 1.55 million, CEO Andy Jassy said "AI progress across the board continues to improve our customer experiences, speed of innovation, operational efficiency, and business growth,

Amazon.com reported solid second-quarter earnings that beat expectations Thursday afternoon.Earnings rose to $1.68 a share versus Wall Street’s consensus estimate of $1.33, according to FactSet, and were up from $1.

Amazon reported earnings Thursday afternoon in the wake of upbeat cloud results from its major rivals that suggested healthy AI demand. MarketWatch will be breaking down the results.

Amazon and Microsoft's dominant position in cloud computing is having an adverse effect on competition, exacerbated by technical and commercial barriers to switching, an inquiry group from Britain's antitrust regulator said.