Talking Points: Amazon enjoys a strong quarter; Taco Bell bounces back; Jersey Mike’s goes public

TECHNOLOGY

Amazon.com beat market expectations for quarterly cloud sales growth on Thursday, calming prior fears among investors over hefty planned outlays for artificial intelligence development. Revenue at its cloud computing unit, Amazon Web Services, jumped 37 percent to $42.2 billion in the second quarter ended June 30, compared with analysts’ consensus estimate of a 31 percent increase, according to data compiled by LSEG. “AWS is booming,” CEO Andy Jassy said in a statement, noting it was the unit’s fastest growth in 18 quarters. “Our AI and chips businesses each eclipsed run rates of more than $25 billion.” The upbeat results could help quell some concerns over Big Tech’s relentless AI investments — set to exceed $700 billion this year — which have strained cash flows at the traditionally cash-rich companies and sparked worries that they might be overbuilding capacity. Companies including Amazon, however, have argued that the spending is crucial. The outlays, they say, help ease capacity constraints that have prevented them from fully meeting AI-driven demand, pointing to their ballooning contract backlogs. — REUTERS

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FAST FOOD

Taco Bell, which moved quickly this month to remove iceberg lettuce linked to the widespread cyclospora outbreak in the United States, said on Thursday that customers were starting to return to its restaurants. The chain became the early face of the outbreak, and federal regulators now attribute 1,947 cases of cyclosporiasis in nine states to iceberg lettuce that was served at Taco Bells. The lettuce had been supplied by Taylor Farms, the country’s largest produce provider, and health officials said they had found evidence that tied the outbreak to the company’s operations in Mexico. Officials at the Food and Drug Administration said they believed that multiple outbreaks were occurring in the United States and that not all of them were linked to Taco Bell. Sales at Taco Bell dropped in the days after it made public that it was pulling all of the iceberg lettuce that Taylor Farms supplied to its restaurants. The lettuce was quickly replaced by a new supplier. On Thursday morning, executives at Yum Brands, which owns Taco Bell, said the restaurant chain was showing signs of moving past the incident. After an initial drop in the early days of the news around the outbreak, sales at its Taco Bell stores have stabilized and are down 2 percent, the company said. — NEW YORK TIMES

SANDWICHES

Jersey Mike’s launched an initial public offering on Thursday, with stock prices valuing the sandwich chain at about $6.7 billion in its New York Stock Exchange debut. The offering raised about $1 billion after pricing at the midpoint of the company’s marketed range on Wednesday, with the company selling roughly 43.5 million shares at $23 apiece. Jersey Mike’s offering marks one of the largest restaurant IPOs in recent years, bringing a fast-growing sandwich chain into a market that has seen few major food-service listings since the pandemic. The Tinton Falls, New Jersey-based company operates a fast-casual submarine sandwich franchise, with more than 3,300 locations across the US and Canada. It plans to expand overseas in the United Kingdom and Ireland, with the first store set to open as soon as later this year, said CEO Charlie Morrison. “We think we can have not only 7,500 stores or more in the US but another 7,500 stores outside the US, that totals 15,000 stores of potential growth,” he said. — REUTERS

ARTIFICIAL INTELLIGENCE

OpenAI slashed prices of its low- and mid-tier AI models on Thursday, a move that may intensify competition in the industry as US companies battle cheaper Chinese rivals for customers increasingly wary of the technology’s ballooning costs. The ChatGPT maker lowered the cost of its smaller GPT-5.6 Luna model by 80 percent and its mid-tier Terra by 20 percent, while leaving the price of its biggest and flagship Sol model unchanged. The cuts show that rising cost scrutiny by businesses facing hefty AI bills is forcing American labs to rethink pricing. Many tech CEOs have also said in recent months that cheaper AI options are key to the technology’s widespread adoption. OpenAI’s new pricing also turns up the heat on Anthropic, whose Claude models dominate enterprise and developer use but sit at the costlier end of the market. Both companies have been under pressure from open-source Chinese rivals such as Z.ai’s GLM-5.2 that nearly match their performance at a lower cost. Analysts have said that cutting prices could boost usage of OpenAI’s and Anthropic’s technology, but strain their finances ahead of highly anticipated initial public offerings. — REUTERS

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CONSUMER SPENDING

Mastercard posted a second-quarter profit that surpassed Wall Street expectations on Thursday, boosted by robust transaction volumes driven by steady consumer spending. Despite fears that geopolitical tensions and the resulting economic uncertainty would dent consumer appetite for spending, shoppers have shown resilience. The stable consumer behavior is supported by a still-strong labor market and continued wage growth, while transaction values have risen due to elevated inflation driven by oil spikes from the US-Iran war. High-income households are accounting for a bulk of the spending, as they continue to make discretionary purchases, whereas lower-income families are largely paring back. Spending is holding up across both these income lines, Mastercard’s outgoing CFO Sachin Mehra told Reuters in an interview, adding that experiences were also driving a larger share of consumption since the pandemic owing to pent-up demand. Payment networks’ results are looked at closely for signals on the health of the economy, given their role in facilitating a significant chunk of transactions on their networks. Earlier this week, peer Visa topped profit expectations for the quarter, buoyed by strong volumes from the FIFA World Cup. American Express, whose customer base is widely seen as more affluent, also beat Wall Street profit estimates and raised its full-year revenue forecast. — REUTERS

RETAIL

Demand for sugar in the US grew modestly along with the population, while use of high fructose corn syrup fell, a report said on Thursday, suggesting Americans may be trying harder to avoid highly processed foods than to cut back on sugar. Cane and beet sugar demand in the US rose 0.6 percent in the first half of the 2025/26 marketing year that started in October, while HFCS deliveries fell 3.5 percent in the same period, said a report by US rural lender CoBank based on compiled data from the Department of Agriculture. “While concerns about sugar consumption dominate headlines, rising USDA delivery data suggest demand for cane and beet sugar remains firmly intact,” the report said, adding that wholesale grocers and food distributors were among the sectors where sugar demand grew more. “Food manufacturers and consumers continue to favor natural sweeteners over more highly processed alternatives, as sugar and HFCS delivery trend lines make clear,” the report said. Three out of four US consumers said they want to limit or completely avoid sugar in a 2025 survey, according to the International Food Information Council. The CoBank report said the Make America Healthy Again movement showed long-term risks for the sugar industry, as did the prospect of increased use of GLP-1 drugs to reduce obesity. “Some projections suggest grocery basket sizes could decline by as much as 31 percent among active users (of GLP-1s). Sweetened foods and beverages are unlikely to be uniquely affected, but they will still face lower demand if consumers generally eat less,” the report said. — REUTERS

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