Amazon's AI & AWS Power Growth
Amazon's Q2 Revenue Surpasses Forecasts as AWS Soars and AI Investments Surge
Anonymous
Key Points
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Amazon's annualized revenue run rates for its AI business and its AI-focused chip business each surpassed $25 billion, underscoring the scale of AI-driven offerings beyond AWS alone.
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Twelve-month purchases of property and equipment totaled $169 billion by June 30, up about $66.1 billion from the prior year, driven largely by AI investments.
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Trailing-12-month free cash flow was negative $7.6 billion as capital spending surged, while operating cash flow rose 33% to $161.4 billion.
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For the third quarter, Amazon projected net sales of about $197 billion to $202 billion and operating income of roughly $22.5 billion to $26.5 billion.
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Investors reacted positively to the results, with after-hours shares rising around 7% on some reports and as much as 9% in others.
Amazon reported second-quarter 2026 revenue of $200.6 billion, up 20% from a year ago, blowing past Wall Street expectations pulse2.com. Net income surged to $62.6 billion — more than triple the year-ago figure — fueled by a $53.4 billion pre-tax gain tied to its investment in AI startup Anthropic finance.yahoo.com.
Shares jumped as much as 9% in after-hours trading after the report dropped dmarketforces.com. AWS, Amazon's cloud unit, grew 37% — its fastest pace in 18 quarters — while the company raised its 2026 capital spending plan to about $220 billion, citing AI infrastructure and rising memory chip costs.
AWS Hits Its Fastest Growth Rate in Four Years
Amazon Web Services brought in $42.2 billion in Q2 revenue, a 37% jump year-over-year electronicsweekly.com. That is the fastest AWS growth rate in 18 quarters. The cloud unit generated $16.6 billion in operating income — about 61% of Amazon's total operating profit for the quarter.
Overall operating income rose 43% to $27.5 billion pulse2.com. Advertising also had a strong quarter, growing roughly 26%. CEO Andy Jassy pointed to booming demand for AI-powered cloud services as a key driver of that momentum.
Anthropic Bet Pays Off in a Single Quarter
A $53.4 billion non-operating pre-tax gain from Amazon's stake in Anthropic dramatically boosted the bottom line finance.yahoo.com. That one item pushed earnings per share to $5.78, beating analyst estimates by a wide margin and up from $1.68 per share in Q2 2025.
Amazon has invested heavily in Anthropic, the AI company behind the Claude model family. The gain reflects a revaluation of that stake. Strip it out, and operating income of $27.5 billion still showed Amazon's core business firing on all cylinders dmarketforces.com.
Amazon's $220 Billion Capex Plan Drains Free Cash Flow
Amazon raised its full-year 2026 capital expenditure target to about $220 billion, up from an earlier plan of roughly $200 billion finance.yahoo.com. The increase stems from AI infrastructure buildout and higher memory chip costs. Twelve-month property and equipment purchases hit $169 billion by June 30, up $66.1 billion from the prior year.
That spending crushed free cash flow. The trailing-12-month figure was negative $7.6 billion pulse2.com. Operating cash flow, however, rose 33% to $161.4 billion. Management signaled the heavy investment will continue as Amazon races to build out AI and data center capacity.
AI Business Crosses $25 Billion Run Rate Milestone
Amazon said its annualized AI revenue run rate and its AI chip business each surpassed $25 billion dmarketforces.com. That puts Amazon's AI-focused units among the largest in the world, separate from AWS itself. North America accounted for 58% of total net sales, with that segment growing 16% year-over-year ecommercebytes.com.
For Q3 2026, Amazon projected net sales of $197 billion to $202 billion and operating income of $22.5 billion to $26.5 billion pulse2.com. Jassy also highlighted faster Prime delivery speeds and grocery growth as signs that the retail business remains strong alongside the AI push.
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