Amazon (AMZN) Q2 2026 Earnings Call — July 30, 2026

Source: Yahoo Finance / Quartr transcript

Operator: Thank you for standing by. Good day, everyone, and welcome to the Amazon.com Quarter Two 2026 financial results teleconference. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today's call is being recorded. For opening remarks, I'll be turning the call over to the Vice President of Investor Relations, Mr. Dave Fildes.

Dave Fildes, VP IR: Hello, and welcome to our Q2 2026 financial results conference call. Joining us today to answer your questions is Andy Jassy, our CEO, and Brian Olsavsky, our CFO. As you listen to today's conference call, we encourage you to have our press release in front of you, which includes our financial results as well as metrics and commentary on the quarter. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2025. Our comments and responses to your questions reflect management's views as of today, July 30th, 2026, only, and will include forward-looking statements.

Andy Jassy, CEO: Thanks, Dave. We're reporting $200.6 billion in revenue, up 20% year-over-year. Operating income was $27.5 billion, up 43% year-over-year. Q2 was another very strong quarter for Amazon. I'll start with AWS, which is booming right now, and I'll share the numbers, what we think is going on, and why we're enthusiastic about the ROIC equation, even with heavy CapEx the next few years.

Revenue growth of 36.7% year-over-year, accelerating for the fifth straight quarter, our fastest growth in 18 quarters back when AWS was less than half its current revenue size. We added over $4.6 billion in revenue quarter-over-quarter, about 80% more than our largest increase ever. Our backlog stands at $496 billion, growing triple digits year-over-year. AWS is now a $169 billion annualized revenue run rate business, which, for perspective, would place it 24th on the Fortune 500 list if it was a standalone company.

Our chips business now has an annual revenue run rate of over $25 billion, growing triple-digit percentages year-over-year. Our AI revenue run rate climbed significantly quarter-over-quarter, and is now also over $25 billion, growing triple-digit percentages year-over-year. Customers choose AWS because we offer the broadest capabilities. They want their AI inference to reside near their other applications and data, and more of it resides in AWS than anywhere else. We're seeing strong growth across both AI and non-AI, what we call core, and growth in one is driving growth in the other.

Growth in AI drives core because post-training reinforcement learning and agent tool use is mostly done on CPUs versus AI accelerators. This is an advantage for AWS, as our Graviton chip is the strongest CPU chip, offering up to 30%-40% better price performance than other options. There is no easier service for building foundation models than our SageMaker AI service. Customers also need a high-performance, cost-effective inference service, and that's what Amazon Bedrock provides.

We've built Amazon Bedrock Agents to provide building blocks as managed infrastructure, recently adding features like policies which give companies deterministic controls over what agents can do, payments so agents can execute transactions autonomously, web search to ground agents' knowledge without having to leave AWS, and a new harness that further speeds up how fast customers can put this all together.

While companies will construct their own purpose-built agents from the ground up, most will also use turnkey agentic services. Coding agents are a good example, and there are several successful ones, including Claude Code, Codex, and our own spec-driven Kiro, which is up to 50% more cost-effective than others and tripled in usage quarter-over-quarter. Another of these agentic services is Amazon Q, an intelligent AI work companion that helps you manage, search, and automate your digital workload across email, calendar, local or cloud files, and custom workflows. Q has momentum, with 3M, Allianz, AstraZeneca, Autodesk, BMW, Exxon, FINRA, Hyundai, Intuit, Mondelēz, Moody's, the NBA, the NFL, Sun Life, and Southwest Airlines all using it.

We recently released AWS Continuum, which discovers, prioritizes, validates, and remediates code vulnerabilities, using the new frontier models to run comprehensive scans. I mentioned earlier that our chips revenue run rate is now over $25 billion. We are unusually well-positioned for this AI inflection, given our leading price-performance chips in both AI with Trainium and CPU with Graviton. In addition to the two leading AI labs in the world, Anthropic and OpenAI, making multi-year, multi-gigawatt commitments to Trainium, an increasing number of AI startups are also adopting Trainium. Graviton is used by 98% of our top 1,000 EC2 customers. The revenue commitments have increased nearly 3x quarter-over-quarter, and Graviton5 is growing nearly 2x faster as Graviton4 did.

Let me talk for a second about how we see this investment playing out. Earlier this year, we said we plan to invest approximately $200 billion in cash CapEx in 2026, the majority of which to support AI and AWS. At this level of spend and higher, we have clear line of sight to strong financial returns. There are two major parts of the investment, the data centers and the servers and networking equipment that go into them. Data center capital is spent starting two years before we can put servers into them to start monetizing. Once a data center opens with servers plugged in, we start generating significant revenue right away and then get to monetize these data centers for 30+ years. For servers and networking equipment, on average, it takes a little less than three years to break even on that investment. The servers currently have a useful life of at least five to six years, and most of our AI capacity these days is being contracted for at least five-year terms.

We now believe we will spend approximately $220 billion in cash CapEx in 2026. The higher cost of memory pushing this number up from our prior estimate of about $200 billion. Even at that amount, we will still not have enough capacity to meet all the demand we have in 2026, and I believe this dynamic will also be true in 2027, too. In fact, the demand we already have for 2028 is striking. We long believed AWS could become a few hundred billion-dollar revenue business and now believe it'll be at least double that, and very possibly be a trillion-dollar annual revenue business for us in time.

Now to Stores. We added millions of new products to our selection, including over 700,000 from notable brands. We also expanded ultra-low price selection on Amazon Haul in the U.S. by nearly 20x since launch and now have over 6 million items priced under $10. We're the second largest grocer in the U.S., and our grocery business continues growing quickly. Same-day orders with perishables average over 3x more units per order, and fresh groceries now make up six of the top 20 best sellers on amazon.com. Amazon Now is available in nine countries and over 250 cities and towns globally, with over 80% growth in sales and units sold quarter-over-quarter.

We recently launched Amazon Supply Chain Services. Any business can move, store, and deliver everything from raw materials to finished products using the same supply chain that supports Amazon. Customers love Alexa for Shopping, our agentic AI shopping assistant. Over 350 million customers have used it in the last 12 months, and engagement accelerated in Q2, with active users nearly doubling and interactions up over 5x year-over-year. Amazon Ads generated $19.8 billion of revenue, up 26% year-over-year.

On entertainment, the inaugural season of NBA on Prime Video delivered strong viewership with a peak of 6.5 million U.S. viewers for Game Seven of the Eastern Conference Semifinals. Amazon Leo is close to 400 satellites in orbit, enough to begin initial satellite internet service this year.

Brian Olsavsky, CFO: Thanks, Andy. Worldwide revenue was $200.6 billion, a 20% increase year-over-year, excluding the impact of foreign exchange. These results include the timing shift of Prime Day into Q2 for most of our largest countries, including the U.S. In Q2, we reported worldwide operating income of $27.5 billion. This includes the benefit from two items that reduced expenses by approximately $1.2 billion during the quarter. First, we received tariff-related refunds of approximately $600 million. Second, we recorded a separate benefit of approximately $600 million related to the change in fair value measurement of energy contracts subject to derivative accounting.

In the North America segment, second quarter revenue was $116.2 billion, an increase of 16% year-over-year. International segment revenue was $42.2 billion, an increase of 15% year-over-year, excluding the impact of foreign exchange. Worldwide paid units grew 17% year-over-year. North America segment operating income was $9.1 billion with an operating margin of 7.9%. International segment operating income was $1.7 billion with an operating margin of 4.1%.

Moving to the AWS segment, revenue was $42.2 billion, up 36.7% year-over-year, driven by both core and AI services. AWS now has an annualized revenue run rate of $169 billion. AWS operating income was $16.6 billion. Now turning to our cash CapEx, which is $53.1 billion in Q2. This primarily relates to AWS and generative AI as we invest to support strong customer demand.

Q3 net sales are expected to be between $197 billion and $202 billion. Two areas are driving the sequential deceleration in net sales growth from Q2 to Q3. First, Prime Day timing shifted this year with the sales event occurring in Q2 for most of our large countries, including the U.S. In 2025, Prime Day was entirely in Q3. Second, the Q3 guidance anticipates an unfavorable impact of approximately 80 basis points from the year-over-year changes in foreign exchange rates. Q3 operating income is expected to be between $22.5 billion and $26.5 billion.