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Amazon stock jumped more than 10% in extended trading after the company delivered better-than-expected second-quarter results and raised its 2026 capital spending forecast to $220 billion. The powerful market reaction reflected strong demand for artificial intelligence infrastructure, particularly across Amazon Web Services.
Amazon reported revenue of $200.61 billion for the quarter, exceeding the $196.47 billion expected by analysts surveyed by LSEG. Adjusted earnings reached $1.97 per share, ahead of the $1.82 estimate.
Amazon Stock Soars as AWS Growth Accelerates
The most important development for investors was the performance of AWS, Amazon’s cloud computing division. AWS revenue climbed 37% year over year to $42.2 billion, surpassing the $40.54 billion forecast from StreetAccount.
The growth rate marked AWS’s fastest expansion since 2021. CEO Andy Jassy described the business as “booming” and pointed to strong demand for artificial intelligence services, cloud capacity and Amazon’s proprietary chips.
The results were especially significant because Amazon’s biggest cloud rivals also reported strong growth. Alphabet said Google Cloud revenue increased 82% in the prior week, while Microsoft reported a 43% rise in Azure revenue for its latest fiscal quarter.
AWS is increasingly becoming the center of Amazon’s investment strategy. The company’s Trainium and Graviton chip businesses, along with its Bedrock artificial intelligence platform, are being positioned as major growth opportunities for enterprise customers.
Explosive AI Spending Pushes Capital Expenditures to $220 Billion
Amazon now expects capital expenditures to reach $220 billion in 2026, up from its previous forecast of $200 billion. Jassy said higher memory prices contributed to the increase, but he also made clear that Amazon’s spending drive is being fueled by unprecedented customer demand.
“Even at that amount, we will still not have enough capacity to meet all the demand we have in 2026,” Jassy told investors. He added that the same dynamic could continue through 2027, while demand already visible for 2028 is “striking.”
The company spent $54.2 billion on capital expenditures during the June quarter, compared with $32.1 billion a year earlier. Much of that investment is going toward data centers, networking equipment, specialized chips and other infrastructure needed to support generative AI workloads.
However, the aggressive spending is putting pressure on Amazon’s cash position. Free cash flow for the trailing 12 months showed an outflow of $7.6 billion, compared with an inflow of $18.2 billion one year earlier.
Critical Investor Question: When Will AI Investments Pay Off?
The surge in amazon stock suggests investors are currently willing to look beyond short-term cash flow pressure. Strong AWS growth and a massive contracted backlog helped reassure Wall Street that Amazon’s spending is tied to real customer demand.
AWS backlog reached $496 billion during the quarter, representing contracted work that has not yet come online. That figure gives Amazon significant visibility into future cloud revenue, although the company still faces challenges in building capacity quickly and profitably.
Investors will likely continue watching whether Amazon can turn its artificial intelligence infrastructure investments into durable earnings growth. Rising costs, competition from Microsoft and Alphabet, and the possibility of slower technology spending remain important risks.
Amazon Gives Cautious Third-Quarter Outlook
Amazon forecast third-quarter revenue between $197 billion and $202 billion. Analysts had expected $204.1 billion, making the guidance weaker than Wall Street’s estimate.
The company attributed part of the difference to difficult comparisons surrounding Prime Day. Amazon moved this year’s discount event to June instead of its usual July schedule, creating an unfavorable comparison for the third quarter.
Amazon said third-quarter growth, excluding the impact of this year’s and last year’s Prime Day timing, would be nearly 400 basis points higher. North America revenue rose 16% year over year to $116.2 billion during the second quarter, supported by the shopping event.
Operating income is expected to range from $22.5 billion to $26.5 billion, compared with the StreetAccount consensus of $24.92 billion.
Strong Results Beyond Cloud Computing
Amazon’s advertising business also exceeded expectations. Advertising revenue reached $19.81 billion, ahead of the $19.43 billion forecast.
The company also highlighted progress in health care. Amazon said it more than doubled the number of new customers using its online pharmacy service, while same-day prescription deliveries grew nearly fivefold.
Net income reached $62.6 billion, or $5.75 per share, compared with $18.2 billion, or $1.68 per share, a year earlier. The company said the latest figure included $53.4 billion in pretax income, primarily related to its investment in AI company Anthropic.
For now, Amazon’s earnings have strengthened the case for its artificial intelligence strategy. The next test will be whether AWS growth remains elevated while the company manages its enormous infrastructure bill and restores positive free cash flow.
Frequently Asked Questions About Amazon Stock
Why did Amazon stock rise after the earnings report?
Amazon stock climbed after the company exceeded revenue and earnings expectations, while AWS revenue grew 37% year over year. The higher 2026 spending forecast also signaled strong artificial intelligence demand.
How much will Amazon spend on capital expenditures in 2026?
Amazon expects capital expenditures to reach $220 billion in 2026, up from its earlier forecast of $200 billion. Higher memory costs and demand for AI infrastructure contributed to the increase.
How fast did AWS grow?
AWS revenue increased 37% year over year to $42.2 billion. Amazon said that was the cloud division’s fastest growth since 2021.
Is Amazon’s free cash flow under pressure?
Yes. Amazon reported a trailing 12-month free cash flow outflow of $7.6 billion, compared with an inflow of $18.2 billion a year earlier, largely because of higher infrastructure spending.
