The news
Amazon Q2 2026 earnings, reported on July 30, 2026, showed sales up 20% to $200.6 billion as AWS grew 37%, its fastest pace in 18 quarters. A $53.4 billion gain, mostly from Anthropic, lifted profit, while AI spending pushed free cash flow negative.
For the quarter ended June 30, Amazon (AMZN) said operating income rose 43% to $27.5 billion from $19.2 billion a year earlier. Net income reached $62.6 billion, or $5.75 per diluted share, compared with $18.2 billion, or $1.68 per share, in the second quarter of 2025. The company said that figure included $53.4 billion of non-operating pre-tax other income, primarily from its investments in Anthropic.
AWS segment sales rose 37% to $42.2 billion, and AWS operating income climbed to $16.6 billion from $10.2 billion. Amazon put AWS's annualized revenue run rate at $169 billion. Chief Executive Andy Jassy said AWS's AI business and Amazon's chips business had each passed $25 billion in annual run rate, both growing at triple-digit percentages. CNBC reported that analysts polled by StreetAccount had expected $40.54 billion in AWS revenue, and that Jassy put the AWS backlog of contracted work not yet delivered at $496 billion.
The cost of that growth showed up in cash flow. Purchases of property and equipment totaled $173.0 billion over the 12 months to June 30, or $169.0 billion net of proceeds and incentives, up 64% from a year earlier, which Amazon said primarily reflects AI investment. Trailing free cash flow swung to an outflow of $7.6 billion from an inflow of $18.2 billion. Purchases in the quarter alone reached $54.2 billion. According to CNBC, Jassy told investors that 2026 capital spending would reach $220 billion, up from a $200 billion forecast, citing rising memory prices.
North America segment sales rose 16% to $116.2 billion and International rose 15% to $42.2 billion, while advertising revenue grew 26% to $19.8 billion. For the third quarter, Amazon guided sales of $197.0 billion to $202.0 billion, or 9% to 12% growth, and operating income of $22.5 billion to $26.5 billion. The company said growth would be nearly 400 basis points higher excluding Prime Day, which CNBC noted moved to June in 2026. CNBC reported that LSEG's analyst consensus for third-quarter revenue was $204.1 billion and that the stock rose more than 10% in extended trading on July 30.
The numbers
- Q2 net sales
- $200.6B (+20%)
- AWS segment sales
- $42.2B (+37%)
- AWS operating income
- $16.6B (vs. $10.2B)
- Operating income
- $27.5B (+43%)
- Net income / diluted EPS
- $62.6B / $5.75
- Pre-tax other income, primarily Anthropic
- $53.4B
- Property and equipment purchases, trailing 12 months
- $173.0B gross; $169.0B net
- Free cash flow, trailing 12 months
- -$7.6B (vs. +$18.2B)
- Q3 2026 sales guidance
- $197.0B-$202.0B
Why CEOs should care
For cloud buyers, Amazon's own comments suggest AI demand is running ahead of AWS supply. CNBC reported Jassy saying that even at the higher spending level, Amazon will not have enough capacity for all 2026 demand, adding that "the demand we already have for 2028 is striking." Enterprises planning large AI deployments should secure capacity reservations early, write delivery dates into contracts, and evaluate Amazon's Graviton and Trainium chips alongside GPU instances, since Amazon featured both prominently in its results.
For CFOs, strip out the $53.4 billion non-operating gain before benchmarking Amazon; operating income of $27.5 billion is the cleaner measure. The bigger signal is cash: $161.4 billion of trailing operating cash flow no longer covers Amazon's net spending on property and equipment. With a backlog Jassy put at $496 billion, expect AWS sales teams to keep pressing for multi-year commitments, and negotiate discounts, ramp schedules and flexibility clauses in return.
For boards, note how intertwined the AI economy has become. Anthropic has made a multi-year, multi-gigawatt Trainium commitment, according to Amazon, and it is also the main source of Amazon's quarterly investment gain, which means reported profits can swing with the value of private AI stakes. For CISOs, Amazon also previewed AWS Continuum, a service that uses frontier models to find, validate and recommend fixes for code vulnerabilities, a sign that security tooling is becoming a main battleground for AI products.
The bigger picture
Rivals were growing fast too. CNBC reported that Alphabet posted 82% Google Cloud growth and Microsoft's Azure revenue rose 43% in its fiscal fourth quarter, and that Alphabet had raised its spending plans to as much as $205 billion. For Amazon, the quarter showed the trade-off it now faces: faster cloud growth, paid for with capital spending that, over the past 12 months, exceeded the cash its business generated.
What happened next
On July 31, 2026, Amazon filed its quarterly report with the Securities and Exchange Commission. It said commitments not yet recognized as revenue on contracts longer than a year, primarily for AWS, were about $496 billion as of June 30, and that it recorded about $50.5 billion of upward adjustments in the quarter, primarily on its nonvoting preferred stock in Anthropic. The filing also showed the total face value of long-term debt at $133.0 billion, up from $68.8 billion at the end of 2025.
On September 14, 2026, Amazon closed a sale of four series of sterling notes due between 2029 and 2045 with an aggregate offering price of 4.242 billion pounds, according to an 8-K filing. The next test is third-quarter results: watch AWS growth, the pace of capital spending against the $220 billion plan, and whether free cash flow stays negative.
