This afternoon, we got new insights into the state of the AI economy via Amazon's earnings report as well as the state of the world's most valuable company, Apple, as it continues to emphasize its lucrative hardware business. Here are the highlights:

Amazon

The company's AI cloud business soared in the second quarter, driving far higher revenue than expected, though its free cash flow also turned negative as it invests heavily in the business.

• Amazon shares rose 9.4% in after-hours trading.

The big picture: The surging AI economy — centered around cloud companies like Amazon, hyperscalers and data center investments — is booming, even as questions are mounting about whether it's sustainable.

Driving the news: Amazon delivered a 20% increase in net sales to $200.6 billion, easily topping S&P Capital IQ expectations of $196.4 billion.

• Much of the gain came from triple-digit growth in Amazon Web Services' AI business and triple-digit growth in its chips business.

Yes, but: Amazon's free cash flow in the 12-month period ending June 30 amounted to an outflow of $7.6 billion, down from an inflow of $18.2 billion in the comparable period a year earlier.

Apple

After recently reclaiming its title as the world's most valuable company by market cap — surpassing Nvidia — Apple posted earnings and revenue that narrowly topped expectations, Axios' Ina Fried reports.

• But that included the impact of tariff refunds.
• The stock fell 4% in after-hours trading following the release.

Zoom in: It's the last earnings report from Tim Cook's long tenure, with John Ternus set to take over as CEO on Sept. 1.

What to watch: Whether consumers recoil from Apple's recently announced price increases.

Taco Bell sales have fallen sharply since the national cyclospora outbreak, but the company's executives say they are already noticing signs of a rebound.

Why it matters: Health officials have identified more than 11,000 confirmed or suspected cases of the parasite, which can cause explosive diarrhea.

Driving the news: Executives at Yum Brands, which owns Taco Bell, said the chain's sales were down 2% since the second quarter ended — noting that the outbreak began about two weeks into the third quarter.

• "The brand has seen a meaningful near-term sales impact," Yum CEO Chris Turner said Thursday, adding, "We expect the sales impact to be temporary."
• Taco Bell's "magic formula" of "brand buzz, innovation, value and digital" will prove resilient, he said.

Zoom in: Taco Bell removed lettuce from its menu soon after the outbreak began. Executives did not say today whether they would continue doing business with the supplier, Taylor Farms.

• "Consumers have become increasingly aware that this is an industrywide issue, not an issue specific to Taco Bell," Turner said.

The impact: Yum Brands shares closed up 3.3% after the company reported a worldwide same-store sales increase of 3% for its entire lineup.

Go deeper

Jersey Mike's Subs found diminished investor appetite on its stock trading debut today, as its shares fell about 6%.

• (Yes, there were sandwiches on the floor of the New York Stock Exchange.)

The big picture: The IPO of the New Jersey-based sandwich chain nonetheless points to growing interest in taking other fast-food stores public.

• For instance, Roark Capital is said to be looking at taking Inspire Brands, the parent of Dunkin', Arby's and Jimmy John's, public, Axios Pro's Ryan Barwick writes.

Zoom in: The Jersey Mike's IPO raised $1 billion for the company and selling shareholders, including Blackstone and the Abu Dhabi Investment Authority.

What they're saying: Asked if Danny DeVito, who stars in commercials for Jersey Mike's, gets free subs, CEO Charlie Morrison told Axios Pro's Dan Primack:

• "If Danny calls me and needs a sub, we'll be happy to give it to him for the rest of his life."

🦔 Citadel, led by founder Ken Griffin, is acquiring the publicly traded assets held by Leopold Aschenbrenner's Situational Awareness. The former OpenAI researcher's hedge fund faced huge losses after a bet on AI and against software stocks. (Axios)

🚙 Zoox, Amazon's self-driving car startup, received federal approval to begin charging for robotaxi rides. (TechCrunch)

🤖 Scale AI has hired Google Cloud COO Francis deSouza as CEO a year after Scale AI founder Alexandr Wang left the AI infrastructure company for Meta. (Axios)

Jake Paul's Most Valuable Promotions is merging with the Professional Fighters League, a well-funded mixed martial arts organization that has spent years trying — and failing — to challenge the industry-leading UFC, Axios' Zachary Basu writes.

Why it matters: The deal comes months after MVP's MMA debut averaged 12.4 million viewers on Netflix for Ronda Rousey vs. Gina Carano, and will effectively stitch together the entire anti-UFC coalition under one roof.

• PFL already swallowed longtime UFC rival Bellator in 2023, adding an elite roster to an ESPN-backed product that still struggles to break through beyond hardcore fans.
• Paul, the YouTuber-turned-boxer whose spectacles with Mike Tyson and Anthony Joshua became global Netflix events, supplies the mainstream heat PFL could never buy.

The bottom line: The merger puts Paul on a two-front collision course with longtime nemesis Dana White, who has launched his own boxing promotion while backing legislation that could remake the sport in the UFC's image.