Amazon postQ: AWS reaccelerates as AI investment pushes CapEx higher

Amazon.com Inc. (NASDAQ: AMZN) delivered a strong second quarter, with revenue and operating income coming in ahead of Visible Alpha consensus estimates as AWS growth accelerated to its fastest pace in more than four years. The results reinforced the investment case for Amazon’s cloud business, but also highlighted the growing cost of its AI build-out, with capital spending rising sharply and full-year CapEx guidance increasing to approximately $220 billion.

The headline EPS beat was unusually large, however, and should be viewed in context: net income included $53.4 billion of non-operating income, primarily related to Amazon’s investment in Anthropic.

Looking at earnings summaries compiled by S&P Global Pronto NLP, together with Visible Alpha pre-quarter consensus expectations and revised outlook, here are the key takeaways.

Key takeaways

AWS was the clear earnings driver. AWS revenue rose 36.8% year-over-year to $42.2 billion, 4.3% above Visible Alpha consensus expectations and marking AWS’s fastest growth in 18 quarters. AWS operating income increased 63.6% to $16.6 billion, beating consensus by 21.5%, while the 39.4% operating margin was more than 550 basis points above expectations.

Group profitability significantly outpaced expectations. Q2 net sales increased 20% year-over-year to $200.6 billion, 2% above consensus, while operating income rose 43.2% to $27.5 billion, 15.6% above expectations. Diluted EPS reached $5.75, but the earnings-per-share beat was inflated by the Anthropic-related investment gain, making operating income a cleaner measure of the quarter’s underlying performance.

North America remained resilient, while international lagged. North America revenue of $116.2 billion exceeded consensus by 2.1%, with operating income up 21.4% and operating margin at 7.9%. International revenue missed consensus by 1.1%, while International operating income was 5% below expectations and margin came in at 4.1%, pointing to more uneven profitability outside the US.

AI investment is moving decisively higher. Purchases of property and equipment reached $54.2 billion, up 68.4% year-over-year and 9.1% above consensus.

Guidance 

Q3 revenue guidance came in below consensus. Amazon expects Q3 net sales of $197 billion–$202 billion, implying 9%–12% year-over-year growth, versus Visible Alpha preQ consensus of $203.9 billion.

Operating income guidance also trails expectations. Amazon expects Q3 operating income of $22.5 billion–$26.5 billion, compared with Visible Alpha preQ consensus of $25.4 billion.

CapEx is the bigger strategic signal. Amazon raised its FY2026 capital expenditure outlook to approximately $220 billion, above Visible Alpha preQ consensus of $206.1 billion. Management attributed the higher spending primarily to continued investments in AI infrastructure, including data centers, servers and networking equipment.

Consensus revisions

Analysts have raised full-year expectations despite cutting near-term revenue estimates. Q3 revenue consensus is currently down 0.9% to $202 billion, while FY2026 revenue estimates are up 0.5% to $828.9 billion, implying 15.6% year-over-year growth.

AWS revisions are notably positive. Q3 AWS revenue estimates have increased 4.7%, while FY2026 estimates are up 3.8%. AWS operating income and operating margin expectations have also moved up, pointing to growing confidence that AI-driven demand can support both faster growth and sustained AWS profitability.

Retail expectations have moved in the opposite direction. Analysts have cut Q3 North America revenue estimates by 1.7% and international estimates by 4.7%, while FY2026 international revenue expectations are down 1.8%. North America Q3 operating income estimates have declined 9.8%, with margin expectations down 61.8 basis points.

Higher AI spending is being incorporated into forecasts. Analysts have raised Q3 purchases of property and equipment estimates by 8.7% and FY2026 estimates by 7.7%. Despite the higher investment burden, FY2026 operating income consensus are up 5%, while EPS estimates are up 42.2% to $12.97. The revisions suggest analysts expect AWS growth and profitability to more than offset the near-term drag from higher infrastructure spending.

Share price reaction 

Amazon shares rallied sharply following the results, reflecting the strength of AWS growth and the scale of the earnings beat. The market appeared willing to look through the higher CapEx outlook as accelerating cloud growth provided greater confidence in the returns from Amazon’s AI investment cycle.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.