AMZN // Q2 2026 EARNINGS
THEVALUETRADER RESEARCH
EARNINGS DASHBOARD: JUL 30, 2026
REF: AMZN-Q2-2026-EARNINGS
Amazon: Q2 2026 Earnings
AWS crosses $42B on its fastest growth in 18 quarters, first time Amazon has cleared $200B in a single quarter
Headline
Net sales of $200.6B beat estimates as AWS grew 36.7%, its fastest pace in 18 quarters, and FY2026 capex guidance jumped to $220B.
NET SALES$200.6B, vs ~$196.2-196.5B est., +20% YoY
AWS REVENUE$42.2B, +36.7% YoY, fastest in 18 qtrs
OPERATING INCOME$27.5B, +43% YoY
DILUTED EPS$5.75, incl. $53.4B Anthropic-related gain
FY2026 CAPEX GUIDANCERaised to ~$220B (from ~$200B)
STOCK REACTION (AH)+9% to +10%
Cleared the Bar
Beats
- Net sales $200.6B vs. ~$196.2-196.5B consensus, the first time Amazon has cleared $200B in a single quarter, +20% YoY
- AWS revenue $42.2B vs. ~$40.5B expected, 36.7% growth, its fastest pace since 2021 and an acceleration from 28% in Q1
- AWS operating income $16.62B vs. $13.62B StreetAccount consensus, 36.8% AWS operating margin
- Operating income $27.5B, +43% YoY, growing faster than revenue despite heavy capex
- AI and Chips businesses each exceeded a $25B annualized run rate, both growing triple digits YoY
Read With Caution
The EPS Asterisk
- Diluted EPS of $5.75 vastly exceeded the $1.82 consensus, but net income of $62.6B includes a $53.4B pre-tax non-operating gain, primarily from Amazon's Anthropic stake
- Stripping the one-off gain out, the "real" operational EPS beat is far more modest than the headline number implies: a now-familiar pattern across mega-cap tech this earnings season
- Free cash flow (TTM) is negative $7.6B, reflecting a $66.1B increase in property and equipment purchases
- Q3 2026 guidance implies deceleration versus Q2's 20% growth. Management attributes this to Prime Day timing and FX, not demand softening
φ 02Income Statement Snapshot
NET SALES (Q2 2026 vs Q2 2025)$200.6B vs $167.7B, +20%
NORTH AMERICA REVENUE$116.2B
AWS REVENUE$42.23B, +36.7% YoY
AWS ANNUALIZED RUN RATE$169B
AWS BACKLOG$496B
OPERATING INCOME$27.5B, +43% YoY
NET INCOME$62.6B, incl. $53.4B one-off gain
DILUTED EPS$5.75 vs $1.82 est.
Q2 CASH CAPEX$53.1B
OPERATING CASH FLOW (TTM)$161.4B vs $121.1B
FREE CASH FLOW (TTM)−$7.6B
For reference, Q1 2026: net sales $181.5B (+17%), AWS $37.6B (+28%, fastest in 15 qtrs at the time), operating margin 13.1% (record), GAAP EPS $2.78 (incl. $16.8B Anthropic gain), Q1 capex $43.2B. Q2's 36.7% AWS growth confirms the reacceleration continued rather than plateaued.
AWS, Booming
- CEO Andy Jassy: "AWS is booming, growing 36.7% year-over-year in Q2, our fastest growth in 18 quarters, and our AI and Chips businesses each eclipsed run rates of more than $25 billion"
- AWS backlog of $496B provides exceptional forward revenue visibility, alongside a $169B annualized run rate
- Amazon highlighted that capacity for 2027 is already largely reserved, with some capacity spoken for in 2028
- Custom silicon (Trainium) continues to scale alongside Bedrock as the primary AWS AI growth vectors
Capital Expenditure & Guidance
- FY2026 cash capex guidance raised to approximately $220B from approximately $200B, driven by higher memory costs and continued AI/cloud infrastructure investment
- Management explained the ROIC framing: servers break even in under 3 years, while data centers are monetized over 30+ years
- Q3 2026 guidance: net sales $197-202B (+9-12% YoY), operating income $22.5-26.5B (vs. $17.4B in Q3 2025)
- Excluding the Prime Day timing shift into Q2, management said Q3 YoY growth would be roughly 400bps higher, framing the sequential deceleration as timing, not demand
Andy Jassy, President & CEO
"AWS is booming, growing 36.7% year-over-year in Q2, our fastest growth in 18 quarters, and our AI and Chips businesses each eclipsed run rates of more than $25 billion."
Bull Case
Positives
- AWS reaccelerating to 36.7%, the fastest pace in 18 quarters, on an already-massive $42B quarterly base is the clearest evidence yet that AI workloads are driving a genuine step-change in cloud demand, not a temporary spike
- AWS operating margin of 36.8% and operating income growing faster than revenue confirm the segment scales profitably even amid heavy capacity investment
- A $496B backlog and reserved capacity into 2027-2028 give Amazon multi-year revenue visibility that few competitors can match
- Crossing $200B in quarterly revenue for the first time is a genuine scale milestone independent of the accounting noise around EPS
Bear Case
Concerns
- The $5.75 headline EPS is dominated by a $53.4B non-operating gain, investors need a clean, comparable operational EPS figure before fully trusting the magnitude of this quarter's "beat"
- FY2026 capex guidance jumping to ~$220B from ~$200B, alongside negative TTM free cash flow, means the capital intensity of this growth cycle keeps escalating
- Q3 guidance implies deceleration from Q2's 20% pace. While management attributes this to Prime Day timing and FX, it still resets near-term growth expectations lower
- Rising memory costs cited as a capex driver echo the same input-cost pressure squeezing Apple's hardware margins this quarter, a sector-wide headwind, not an Amazon-specific one
- Shares closed the regular session up 3.9% to $235.50, then surged further to $257.04 in extended trading, a combined move of roughly 9-10%
- Amazon's report followed Alphabet's Google Cloud +82% growth and Microsoft's Azure +43% growth the same week, all three hyperscalers posted accelerating cloud growth simultaneously, reinforcing the AI infrastructure demand narrative
- Next scheduled report: Q3 2026, expected October 22, 2026
φ 07TVT Verdict, Quick Reference
Strip out the $53.4B Anthropic-related gain, and Amazon's Q2 2026 is still one of the strongest operating quarters in company history: AWS at 36.7% growth, its fastest in 18 quarters, operating income up 43%, and the first-ever $200B revenue quarter. This lands the same week Alphabet and Microsoft both posted accelerating cloud growth, collectively the strongest evidence yet that the AI infrastructure buildout is converting into real, recognized revenue across all three major hyperscalers simultaneously. The capex escalation to ~$220B and negative free cash flow are the genuine offsetting concerns, Amazon, like its cloud peers, is now spending at a pace that requires sustained multi-year demand to justify. The market's emphatic 9-10% after-hours rally suggests investors are, for now, willing to extend that trust. Next earnings October 22, 2026.
Next Earnings
Oct 22, 2026
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