Omanghana
Amazon reported record second-quarter results for 2026, exceeding Wall Street expectations as accelerating demand for cloud computing and artificial intelligence services powered growth across the company.
Net sales increased 20% year over year to $200.6 billion during the quarter ended June 30, marking the first time Amazon’s revenue has exceeded $200 billion outside the holiday period. The result surpassed analysts’ expectations of approximately $197 billion.
Operating income rose 43% to $27.5 billion, compared with $19.2 billion during the same period in 2025.
Amazon reported net income of $62.6 billion, or $5.75 per diluted share, up from $18.2 billion, or $1.68 per share, a year earlier. The earnings figure was significantly higher than Wall Street’s projection of approximately $1.82 per share.
Much of the increase in net income came from $53.4 billion in non-operating pre-tax income, primarily linked to an unrealized gain on Amazon’s investment in artificial intelligence company Anthropic. The gain substantially boosted reported earnings but did not represent income generated by Amazon’s day-to-day operations.
Amazon Web Services emerged as the quarter’s strongest operating division, with sales jumping 37% to $42.2 billion. It was the cloud unit’s fastest growth rate in 18 quarters and exceeded market expectations.
AWS operating income reached $16.6 billion, up from $10.2 billion a year earlier. The division recorded an operating margin of approximately 39.4% and contributed more than half of Amazon’s total operating profit.
Chief Executive Officer Andy Jassy said both AWS’s artificial intelligence business and Amazon’s custom-chip operation had surpassed annualized revenue run rates of $25 billion.
The chip business includes Amazon’s Trainium processors, designed for training AI models, and Inferentia chips, which help customers run completed models more efficiently.
Demand continues to exceed Amazon’s available cloud capacity. AWS ended the quarter with a contract backlog of approximately $496 billion, up sharply from $364 billion three months earlier.
Amazon’s advertising business also maintained strong growth, with revenue rising 26% to $19.8 billion. Advertising has become one of the company’s most profitable divisions as businesses pay to promote products across Amazon’s shopping platform, Prime Video and other services.
The company also reported progress in its retail and logistics operations. More than 40% additional items were delivered to Prime customers through same-day or overnight services during the first half of the year.
Amazon’s Prime Day shopping event, held in June, generated an estimated $26.4 billion in consumer spending, according to Adobe Analytics.
Despite the strong results, Amazon’s aggressive infrastructure spending continued to pressure cash flow. The company raised its full-year capital expenditure forecast from $200 billion to $220 billion.
The spending will largely support the construction of data centers, purchases of advanced computing equipment and efforts to secure memory chips and other components required for artificial intelligence services.
Amazon recorded a trailing 12-month free-cash-flow outflow of $7.6 billion, compared with a positive $18.2 billion during the previous comparable period. The company attributed the decline primarily to a $66.1 billion year-over-year increase in property and equipment purchases.
Jassy said Amazon often begins investing in data centers about two years before the facilities start generating revenue. He added that, even with the increased spending plan, the company expects demand for computing capacity to remain greater than supply through 2026 and potentially into 2027.
For the third quarter, Amazon forecast revenue of between $197 billion and $202 billion, representing annual growth of 9% to 12%. The midpoint falls below Wall Street’s estimate of approximately $203.9 billion.
The company also expects third-quarter operating income of between $22.5 billion and $26.5 billion.
Investors nevertheless focused on the sharp acceleration at AWS and evidence that Amazon’s massive AI investments are generating stronger demand. The company’s shares climbed nearly 9% in after-hours trading following the announcement.
Source: Omanghana
