Amazon earnings preview: Q2 2026

What’s happening to margins?

According to Visible Alpha consensus, Amazon's (NASDAQ: AMZN) total revenue for North America of $113.8 billion expected for Q2 have edged upward since the February 2026 release, driven by resilience in Amazon’s online retail business. Expectations for both North America and International online retail segments have remained stable since last quarter. Consensus for AWS also has remained around $40.5 billion. The focus will likely be on the Q2 2026 performance and Q3 2026 outlook for the online retail and AWS margins and their impact on EPS growth.

The North America retail operating profit margin has increased significantly from losses a few years ago to an estimated 7.5% for Q2 2025, a 100bps decline since February 2026. For Q2, the estimated margin expectations have narrowed to a range of 3.1% to 8.9%, with consensus at 7.5%. The International operating profit margin range is more extreme at 1.7% to 13.4%, with consensus settling at 4.2%. The debate about the impact of Middle East conflict and tariffs is captured in the significant range of margin estimates for these segments.

AWS margin for Q2 is expected to be 33.8%. It has come down from the 37.7% level expected last October, but up from the 32.9% level in February 2026. The range of estimates for the Q2 AWS margin has narrowed 200bps to 30.9% to 38.2% with consensus at 33.8%, reflecting debate about the continued demand for AI and cloud services.

We are closely watching how the company will guide Q2 2026 and what the company will say about its investments into AI, as Amazon’s FY 2026 CapEx numbers have continued to increase. According to consensus projections, CapEx estimates have expanded almost 4x from $52.7 billion in FY 2023 to currently over $200 billion in FY 2026. Given the current backdrop and increasing energy and chip prices, there are questions about whether the Company will raise its full year CapEx guidance.

The stock has traded down 7% since last quarter. The consensus P/E for 2027 is 24x and a target price of $317 and an implied return of nearly 30%.

Could the Q2 release provide a catalyst for the stock?