AWS Posts Fastest Growth in 18 Quarters
<cite index="5-7">Amazon Web Services (AWS) segment sales increased 37% year-over-year to $42.2 billion in the second quarter ended June 30, 2026.</cite> <cite index="1-6">The growth rate marked AWS's fastest pace in 18 quarters, as cloud and AI demand strengthened.</cite> <cite index="7-6">The growth rate also accelerated sharply from 28% in the first quarter.</cite>
<cite index="2-10">AWS revenue growth accelerated for the fifth straight quarter, reaching an annualized run rate of $169 billion and a contracted backlog of $496 billion growing triple digits.</cite> <cite index="7-13,7-14">The subsidiary collected $16.62 billion in second-quarter operating income, boasting a 36.8% operating margin, while Google Cloud's operating margin was 35.6%.</cite> <cite index="7-15">Nearly 61% of Amazon's overall operating profit now comes from AWS.</cite>
Consolidated Results
<cite index="5-1">Net sales increased 20% to $200.6 billion in the second quarter, compared with $167.7 billion in the second quarter of 2025.</cite> <cite index="5-8">Operating income increased to $27.5 billion in the second quarter, compared with $19.2 billion in second quarter 2025.</cite> <cite index="6-8">Net income for the quarter reached $62.6 billion, or $5.75 per diluted share, compared with $18.2 billion, or $1.68 per diluted share, in the second quarter of 2025.</cite> <cite index="6-9">The company said Q2 net income included non-operating pre-tax income of $53.4 billion, primarily from its investments in Anthropic.</cite>
Capital Expenditure Outlook Raised to $220B
<cite index="9-6,9-7">Amazon raised its full-year 2026 cash capital expenditure forecast to approximately $220 billion from approximately $200 billion, with the increase reflecting higher memory costs and continued investment in AI and cloud infrastructure.</cite> <cite index="12-3">In February, the company had said capital expenditures (capex) would reach $200 billion for the year, and it held steady on that forecast in April.</cite>
<cite index="11-5,11-6,11-7">The specific driver Chief Executive Officer Andy Jassy named was memory costs. High-bandwidth memory — the specialized chip architecture that sits atop every AI accelerator graphics processing unit (GPU) — has seen manufacturing capacity diverted toward AI data center use, pushing memory contract prices up sharply in 2026 and adding roughly $20 billion to Amazon's projected infrastructure bill.</cite>
<cite index="12-6,12-7">Jassy said: "But 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."</cite>
<cite index="2-6">Cash capital expenditures totaled $53.1 billion in Q2 alone.</cite> <cite index="6-14">Property and equipment purchases on a trailing 12-month basis reached $169 billion, up 64% year-over-year, driven by investments in AI infrastructure.</cite>
AI and Custom Silicon as Growth Pillars
<cite index="7-7">AWS's artificial intelligence business and the unit's chips each brought in over $25 billion in annualized revenue, more than doubling from last year.</cite> <cite index="8-6">Amazon has increasingly looked to highlight its in-house chips division, which includes the Trainium and Graviton brands, as a newer growth pillar for the company.</cite>
<cite index="19-1">The two businesses most directly reflecting the Trainium and Amazon Bedrock investment — AWS's AI services arm and its chips business — each crossed $25 billion in annualized revenue run rates in Q2, both growing at triple-digit year-over-year rates.</cite> <cite index="5-9">Graviton is now used by 98% of the top 1,000 EC2 customers, with revenue commitments having increased nearly three times quarter-over-quarter, and Graviton5 growing nearly twice as fast as Graviton4 did.</cite>
<cite index="19-2">Anthropic and OpenAI, which Jassy described as the two leading large language model (LLM) labs in the world, have each made multi-year, multi-gigawatt capacity commitments on Trainium.</cite> <cite index="22-6">Anthropic separately committed more than $100 billion over the next ten years to AWS technologies, securing up to 5 gigawatts of new capacity to train and run its Claude models.</cite>
Forward Guidance and Market Context
<cite index="3-7">For the third quarter, Amazon guided for net sales between $197 billion and $202 billion and operating income between $22.5 billion and $26.5 billion.</cite> <cite index="7-9">Microsoft reported that revenue from Azure and other cloud services grew 43% during its fiscal fourth quarter.</cite> <cite index="6-15">Free cash flow on a trailing 12-month basis swung to an outflow of $7.6 billion from an inflow of $18.2 billion in the prior year period.</cite>