01—Abstract
Summary
Summary of the 8-K filed July 30, 2026. Cited figures are marked; the original filing is the authoritative source.
Amazon reported second quarter 2026 net sales of $200.6 billiona, up 20% year-over-year, with operating income of $27.5 billion, up 43%.
Growth was led by AWS, whose sales rose 37% to $42.2 billionb and whose operating income nearly doubled-to-plus-60% (about 63%) to $16.6 billion. North America sales rose 16% to $116.2 billion and International rose 15% to $42.2 billion. Advertising services grew 26%.
Operating margin expanded to 13.7% from 11.4%, and the AWS segment margin reached 39.4%. Reported net income of $62.6 billionc ($5.75 per diluted share) is not representative of operating performance. It includes $53.4 billion of non-operating other income, which the company attributes primarily to its investments in Anthropic.
Balance sheet data supports this: other assets rose to $284.1 billiond from $122.6 billion at year-end 2025, and accumulated other comprehensive income rose to $66.3 billion from $28.2 billion. Investors should look at operating income and segment results rather than headline EPS. The main concern is cash flow.
Trailing twelve-month operating cash flow grew 33% to $161.4 billion, but free cash flow turned to a $7.6 billion outflow, compared with $18.2 billion of inflow a year earlier. The company attributes this to a $66.1 billion year-over-year increase in net capital expenditures, primarily for AI infrastructure.
Long-term debt more than doubled to $128.9 billion from $65.6 billion at year-end 2025. For third quarter 2026, the company guided to net sales of $197.0 to $202.0 billion (9% to 12% growth) and operating income of $22.5 to $26.5 billion, versus $17.4 billion a year earlier.
02—Key points
Key Highlights
- Net sales rose 20% to $200.6 billion, and operating income rose 43% to $27.5 billion, with consolidated operating margin expanding to 13.7% from 11.4%.
- AWS net sales grew 37% to $42.2 billion, the fastest growth in 18 quarters, and AWS operating income rose to $16.6 billion from $10.2 billion, with a 39.4% segment margin.
- Net income of $62.6 billion ($5.75 per diluted share) includes $53.4 billion of non-operating other income, primarily from Anthropic investments, so headline earnings overstate core profitability.
- Trailing twelve-month free cash flow was a $7.6 billion outflow versus $18.2 billion of inflow a year earlier, driven by a $66.1 billion increase in net capex tied to AI investment, even as operating cash flow rose 33% to $161.4 billion.
- AI momentum: AWS AI and chips businesses each exceeded $25 billion annualized run rates, with Anthropic and OpenAI making multi-year, multi-gigawatt Trainium commitments.
- Advertising services grew 26% to $19.8 billion, and North America and International segment operating margins improved to 7.9% and 4.1%, respectively.
- Third quarter 2026 guidance calls for net sales of $197.0 to $202.0 billion (9% to 12% growth) and operating income of $22.5 to $26.5 billion, with an estimated 80 basis point unfavorable FX impact.
03—Questions
Frequently Asked Questions
Why did net income jump so sharply, and is it sustainable?
Net income of $62.6 billion included $53.4 billion of non-operating other income, primarily from Amazon's investments in Anthropic. These gains are mark-to-market and non-operating, so they vary with the valuation of those holdings and are not a measure of core business earnings. Operating income of $27.5 billion is the better indicator of underlying performance.
Why did free cash flow turn negative?
Free cash flow fell to a $7.6 billion outflow for the trailing twelve months because purchases of property and equipment, net of proceeds and incentives, rose by $66.1 billion year-over-year. Management attributes this mainly to AI infrastructure investment. Operating cash flow grew 33% to $161.4 billion, so the shift reflects the pace of capital spending rather than weaker operations.
How is the AWS business performing, and what drives its growth?
AWS net sales rose 37% to $42.2 billion, the fastest growth in 18 quarters, and operating income rose 64% to $16.6 billion. Growth was driven by AI demand, including Bedrock (which customers spent more on in Q2 than in all prior quarters combined), Trainium adoption by Anthropic and OpenAI, and Graviton5. Revenue commitments for Graviton increased nearly 3x quarter-over-quarter.
What does the company's balance sheet look like after these changes?
Total assets rose to $1.10 trillion from $818.0 billion at December 31, 2025. Property and equipment, net, increased to $446.0 billion from $357.0 billion, and other assets increased to $284.1 billion. Long-term debt more than doubled to $128.9 billion from $65.6 billion, and cash plus marketable securities totaled $122.99 billion. Stockholders' equity rose to $551.6 billion, largely due to the increase in accumulated other comprehensive income.
What should investors expect for the third quarter of 2026?
Management guided to third quarter net sales of $197.0 to $202.0 billion, representing 9% to 12% growth. Excluding the effect of Prime Day timing in both years, growth would be about 400 basis points higher. Operating income is expected to be $22.5 to $26.5 billion, compared with $17.4 billion in the third quarter of 2025. The guidance excludes energy derivative remeasurements and any new acquisitions, restructurings, or legal settlements.
04—Continue