July 31 (Reuters) - Amazon shares jumped more than 12% before the bell on Friday after the e-commerce and cloud giant posted its strongest cloud growth in over four years, bolstering investor confidence that its multibillion-dollar AI bets are driving a fresh wave of demand.

Amazon shares jump as AWS revenue and margins accelerate faster than rising AI capex, signaling stronger cloud demand and improving returns on Amazon’s heavy investments.

AWS sales expanded 37% year over year, which trounced analysts' expectations for 31% growth.

Amazon reported $200.6 billion in second-quarter revenue, up 20%, with AWS growing 37%, its fastest pace since the end of 2021.

Amazon Web Services momentum is accelerating, with strong demand for artificial intelligence and backlog growth supporting expectations for growth above 40% next year, UBS said in a note Friday. The analysts said the company disclosed $25 billion in AI annual recurring revenue and $496 billion in backlog,

Amazon Web Services showed quarter-over-quarter growth that was 80% more than its prior largest increase, Amazon CEO Andy Jassy told investors on Thursday. The cloud business recorded $42.2 billion in revenue,

The e-commerce and cloud giant topped second quarter expectations as accelerating cloud growth at Amazon Web Services (AWS) helped drive strong results.

CEO Andy Jassy hiked the company’s capex guidance about 10% to $220 billion, but investors loved a booming AWS business.