Amazon's stock climbed 15 percent on July 31, 2026, following the release of its second-quarter earnings report.
The company posted revenue of $200.6 billion, surpassing expectations by $4.2 billion.
Net sales rose 20 percent year over year, fueled by strong performance in its cloud computing division, Amazon Web Services (AWS).
AWS revenue grew 37 percent to $42.2 billion, marking its fastest quarterly growth in 18 quarters.
Operating income reached $24.5 billion, with AWS operating margin expanding to 39 percent.
The results included a $53.4 billion non-operating gain from a valuation increase of AI startup Anthropic, following its $65 billion funding round in May.
Investment and Cash Flow
To meet growing demand for cloud and AI workloads, Amazon raised its planned 2026 capital expenditures from $200 billion to $220 billion.
This increased spending pushed free cash flow to negative $7.6 billion over the trailing twelve months, while operating cash flow rose 33 percent to $161.4 billion.
CEO Andy Jassy noted that server capacity remains constrained relative to customer demand across cloud and AI services.
"We added over $4.6 billion in revenue quarter over quarter — about 80% more than our largest increase ever," he said.
"Our backlog stands at $496 billion, growing triple digits year over year."
Jassy highlighted AWS's integrated infrastructure as a key advantage. "Customers choose AWS because we offer the broadest capabilities," he stated.
"They want their AI inference to reside near their other applications and data, and more of it resides in AWS than anywhere else."
He added that financial returns on AI investments are tracking favorably compared to the historical trajectory of core cloud services.
"We see the margins and returns in AI tracking what we saw with Core at the same point of evolution, actually a little ahead," Jassy said.
Analysts viewed the results positively. "This was really a home run for Amazon," said Arun Sundaram, Senior Vice President at CFRA Research.
He noted that the cloud unit's scale has expanded dramatically while maintaining operational momentum. "This growth rate justifies the spending," Sundaram added.
"AWS is now running at about a $170 billion annual revenue run rate — that's more than four times larger than it was in 2019."
In other segments, North American retail sales increased 16 percent, while international revenue rose 15 percent. Advertising revenue climbed 26 percent to $19.8 billion.
For the third quarter, Amazon projected revenue growth between 9 percent and 12 percent, factoring in foreign exchange headwinds and the timing shift of its annual Prime Day event into the second quarter.
