Amazon hikes 2026 capex to $220 billion due to higher memory costs

Amazon reported better-than-expected revenue and cloud growth for the second quarter. The stock shot up more than 9% in extended trading.

Here's how the company did, compared with estimates from analysts polled by LSEG:

Wall Street was also looking at other key revenue numbers:

Revenue in Amazon's cloud segment expanded 37% year over year during the quarter, surpassing Wall Street's expectations for 31% growth. That marked the unit's fastest growth since 2021, Amazon CEO Andy Jassy said in the earnings release.

Heading into the earnings report, investors were keenly focused on AWS growth after Amazon's primary cloud rivals posted robust cloud results. Alphabet last week reported Google Cloud growth of 82%, while Microsoft's Azure cloud revenue rose 43% during the fiscal fourth quarter.

Jassy said AWS is "booming," and pointed to the growth of its artificial intelligence and homegrown chips units, which both exceeded a $25 billion annual revenue run rate. Amazon has increasingly looked to highlight its in-house chips division, which includes the Trainium and Graviton brands, as a newer growth pillar for the company. Its AI products like the Bedrock model marketplace have primarily been targeted for enterprises.

Amazon has been juggling the need to spend massive sums on AI products and infrastructure, while also appeasing jittery investors eager to see returns on those investments. Capital expenditures during the quarter reached $54.2 billion during the June quarter, compared with $32.1 billion a year ago.

The lavish spending has caused Amazon's free cash flow to flip into the red. The company's free cash flow for the trailing twelve months amounted to an outflow of $7.6 billion, while it recorded an inflow of $18.2 billion one year earlier.

On a conference call with investors, Jassy highlighted that those investments are necessary to fulfill the surging demand for its cloud services. AWS backlog, or contracted work that hasn't come online yet, reached $496 billion during the quarter, he said.

For the current quarter, Amazon guided for revenue between $197 billion and $202 billion. Analysts polled by LSEG were expecting $204.1 billion.

The company blamed tough comparisons to last year's third quarter as a result of its decision to shift this year's Prime Day discount event up to June, instead of its typical July timeframe. Excluding the impact of this year and last year's Prime Day, third-quarter 2026 growth "would be nearly 400 basis points higher," Amazon said.

Amazon doesn't disclose Prime Day revenue, but U.S. sales across online retailers grew 9% to $26.4 billion during the weeklong event, according to Adobe. Prime Day helped lift Amazon's North America revenue 16% year over year to $116.2 billion during the second quarter.

Operating income in the third quarter is expected to be in the range of $22.5 billion to $26.5 billion, while analysts polled by StreetAccount forecast $24.92 billion.

Net income for the second quarter was $62.6 billion, or $5.75 per share, compared with $18.2 billion, or $1.68 per share, a year earlier. The company said this includes pre-tax income of $53.4 billion, primarily from its investments in AI lab Anthropic.

Amazon said it more than doubled the number of new customers for its online pharmacy service, and grew same-day prescription deliveries "nearly 5x." The company has operated Amazon Pharmacy since 2020, and the service remains a key pillar of its health-care push, but it has shared scant details about user sign-ups.