Amazon’s High-Margin Advertising Business Is Accelerating

That wraps up our initial coverage of Amazon’s Q2 results. Thank you for stopping by!

Amazon’s trailing-12-month operating cash flow increased 33% to $161.4 billion, but free cash flow swung from an $18.2 billion inflow to a $7.6 billion outflow.

The reversal reflects an additional $66.1 billion in annual property and equipment spending, primarily for AI infrastructure.

Amazon purchased $173.0 billion of property and equipment over the past year, underscoring the enormous cost of supporting AWS’s reacceleration.

Amazon revealed that both its AWS AI business and proprietary chip business have surpassed $25 billion annual revenue run rates, with each growing at triple-digit rates.

Trainium is also gaining meaningful outside validation. Amazon disclosed multiyear, multi-gigawatt commitments from Anthropic and OpenAI, strengthening the case that its custom silicon can become a major alternative to traditional AI accelerators.

Amazon just reported Q2 earnings, with shares initially up 6% following the report. Here are the key numbers:

• Revenue: $200.6B vs. $197.01B expected
• EPS: $5.75 vs. $1.82 expected
• AWS Revenue: $42.23B vs. $40.57B expected
• Operating Income: $27.46B vs. $23.61B expected

Quick Read:

Amazon delivered a broad beat, with revenue exceeding estimates by approximately $3.6 billion and operating income topping expectations by nearly $3.9 billion.

AWS was the standout, beating estimates by $1.66 billion and providing early validation for Amazon’s enormous AI infrastructure investments.

Bull Case

• AWS re-acceleration: 28% growth plus landmark OpenAI 2 GW Trainium and Anthropic up to 5 GW commitments.
• Beat streak: Fifth consecutive EPS beat likely; Q1 landed 68.18% above consensus.
• Ads and custom silicon: Advertising crossed $70 billion TTM; chips passed a $20 billion run rate.
• Retail strength: Stores unit growth of 15%, the highest since COVID.

Bear Case

• Cash flow squeeze: TTM free cash flow of $1.2 billion against capex of $44.2 billion in one quarter.
• AWS margin slippage: 37.7% vs 39.5% a year ago.
• Debt load: Long-term debt of $119.1 billion, roughly double.
• Macro risks: Management flagged tariff and recessionary pressures.

This live blog is being updated by Thomas Richmond, a 24/7 Wall St. contributor. You’ll get expert analysis of Amazon’s earnings.

Simply stay on this page, and new updates will appear below automatically. We expect Amazon to release earnings shortly after 4:00 p.m. ET.

Guidance Is Everything: What Would Move the Stock After Hours

Investors will be listening for Amazon’s Q3 and full-year guidance, after recent forecasts that 2026 capex is tracking above $200 billion. Amazon typically guides conservatively, then beats: it has topped EPS estimates in all 11 recent releases, with surprises usually landing in the 22%-26% range.

Bullish scenario: Q3 revenue guide above $200 billion, operating income above $24 billion, AWS growth sustained above 25%, and capex framed as demand-driven with clear ROI.

Bearish scenario: AWS decelerating below 24%, a wide low-end on operating income signaling tariff or consumer weakness, or capex creep beyond $200 billion without margin visibility.

Investors want specifics on AWS margin (37.7% in Q1), advertising trajectory, and Amazon Leo cost ramp. Guidance drives the after-hours move more than the beat itself.

With the earnings report under 30 minutes away, Amazon (NASDAQ:AMZN) is bouncing hard, up 4.71% intraday to $237.32. The full-chain put/call ratio sits at 0.54, with tomorrow’s expiry skewed even more bullish at 0.47.

What Moves the Stock Tonight

Consensus sits at $1.8227 EPS on $196.4 billion in revenue. Watch three thresholds:

• AWS growth: sustaining 28% unlocks upside; a slip below mid-20s triggers selling.
• Operating income: above the $24B high end validates margin expansion.
• Capex commentary: TTM free cash flow already collapsed 95% to $1.2B; a raised spend guide could pressure shares.

History favors bulls, with 10 beats in 11 quarters, though day-of reactions have swung from -8.78% to +9.58%.

Ahead of tonight’s Amazon (NASDAQ:AMZN) call, here’s what to watch beyond the headline numbers.

Top 5 Analyst Questions

• Is AWS growth holding near 28%, and how large is backlog after the $100B+ Anthropic deal?
• Can AWS margin recover from 37.7%?
• ROIC path on $200 billion 2026 capex?
• Trainium3 capacity, given it’s nearly fully subscribed?
• Prime Day contribution and tariff/consumer impact?

Key Topics and Buzzwords

• Listen for: “AI” 10+ times (97.1% odds), “Prime Day” (97.4%), “Tariff” (94.5%), plus “gigawatts,” “Bedrock,” “agentic,” “inflection.”
• Amazon Leo commercial launch, Zoox rollout, advertising durability off 24% growth.

Red Flags

• Free cash flow, which fell 95% to $1.2 billion TTM.
• Long-term debt at $119.1 billion.
• Any hint Prime Day cannibalized Q3 or that Q3 guidance undershoots consensus.

Amazon reports Q2 2026 earnings after today’s close, with Wall Street expecting adjusted EPS of $1.82 on approximately $196.4 billion in revenue. Polymarket traders assign a 96.2% probability of an earnings beat, even as Amazon shares have fallen 7.43% over the past week.

AWS growth and Amazon’s enormous capital spending program will likely drive the reaction. With annual capex expected to surpass $200 billion, investors need evidence that cloud demand can justify the investment.

A clean beat with AWS growth holding near 28% would strengthen the AI infrastructure thesis. Slower AWS growth or weaker margins could revive concerns that Amazon is spending too aggressively.