〈Earnings〉AWS' Explosive Growth Drives Amazon's Q2 Profit More Than Triples, Stock Surges 9% After Hours

Amazon (AMZN-US) released its second-quarter 2026 earnings report, showing robust growth across cloud computing, advertising, and AI businesses, with both revenue and profit surpassing market expectations. Amazon Web Services (AWS) achieved its fastest revenue growth since 2021, driving the stock to surge over 9% in after-hours trading.

According to the report, Amazon's Q2 revenue reached $200.61 billion, exceeding the LSEG analyst consensus estimate of $196.47 billion. Earnings per share (EPS) came in at $5.75, far surpassing the market expectation of $1.82.

Net income for the quarter reached $62.6 billion, a year-over-year increase of over 243%, compared to $18.2 billion in the same period last year. EPS also rose sharply from $1.68 to $5.75. The company noted that the quarter's net income included a $53.4 billion pre-tax gain from its investment in AI startup Anthropic, a key driver behind the profit surge.

AWS performance, closely watched by the market, was equally impressive. AWS revenue reached $42.2 billion in Q2, exceeding StreetAccount's estimate of $40.54 billion, growing 37% year-over-year. This growth rate not only surpassed Wall Street's forecast of 31% but marked the fastest pace since 2021.

In comparison, rival Alphabet (GOOGL-US) recently reported Google Cloud revenue growth of 82%, while Microsoft's (MSFT-US) Azure cloud business grew 43% in its latest quarter, indicating that global demand for AI is benefiting all major cloud providers.

Amazon CEO Andy Jassy stated in the earnings call that AWS is currently in a "booming" phase, with particularly rapid growth in AI services and in-house chip development. Products such as the in-house AI chips Trainium and Graviton, and the enterprise AI platform Bedrock, now have annualized revenue run rates exceeding $25 billion each, becoming key new growth engines for AWS.

Jassy emphasized that demand for AI infrastructure from enterprises continues to grow rapidly, requiring Amazon to maintain substantial capital expenditures to meet future demand.

Q2 capital expenditures (capex) reached $54.2 billion, a roughly 69% increase from $32.1 billion in the same period last year, reflecting ongoing expansion of AI data centers and cloud infrastructure.

Due to massive AI investments, Amazon's free cash flow over the past 12 months turned from a net inflow of $18.2 billion last year to a net outflow of $7.6 billion.

During the earnings call, Jassy noted that AWS's current backlog of unfulfilled contracts has reached $496 billion, a record high, underscoring that enterprise AI demand far exceeds current supply capacity. The company will continue to expand its infrastructure to fulfill future orders.

Beyond AWS, Amazon's advertising business also maintained steady growth. Q2 ad revenue reached $19.81 billion, exceeding the market estimate of $19.43 billion, solidifying its position as the world's third-largest digital advertising platform.

In retail, North America segment revenue rose 16% year-over-year to $116.2 billion, partly due to this year's Prime Day being held in June for the first time.

Amazon noted that the earlier Prime Day shifted the revenue recognition timing, creating a higher year-over-year comparison base for Q3. As a result, the company forecasts Q3 revenue between $197 billion and $202 billion, below LSEG's market estimate of $204.1 billion.

The company explained that excluding the Prime Day timing adjustment, Q3 2026 revenue growth would be nearly 400 basis points higher, indicating the conservative outlook stems from timing changes rather than weakening demand.

Adobe (ADBE-US) previously reported that during this year's Prime Day, overall U.S. e-commerce sales grew 9% year-over-year to $26.4 billion, reflecting resilient consumer demand.

Amazon forecasts Q3 operating income between $22.5 billion and $26.5 billion, with a midpoint of $24.5 billion, close to StreetAccount's estimate of $24.92 billion.

Beyond core operations, Amazon continues to expand into the healthcare market. The company reported that in Q2, Amazon Pharmacy added more than twice as many new customers compared to the same period last year, with same-day prescription deliveries growing nearly fivefold. Since its 2020 launch, Amazon Pharmacy has been a strategic pillar in Amazon's healthcare expansion, though the company has not disclosed specific user numbers.

Overall, the market views Amazon as leveraging massive capital expenditures to secure leadership in AI infrastructure and the cloud market. While short-term free cash flow is compressed, AWS's rapid growth, the swift scaling of in-house AI chips, and a massive backlog indicate that AI investments are beginning to translate into tangible revenue and profit, becoming a key driver for the company's medium- to long-term growth.