Amazon.com, Inc. · Q2 2026 call

Revenue growth of 36.7% year-over-year, accelerating for the fifth straight quarter, our fastest growth in 18 quarters back when AWS was less than half its current revenue size. We added over $4.6 billion in revenue quarter-over-quarter, about 80% more than our largest increase ever. Our backlog stands at $496 billion, growing triple digits year-over-year.

For servers and networking equipment, on average, it takes a little less than three years to break even on that investment. The servers currently have a useful life of at least five to six years, and most of our AI capacity these days is being contracted for at least five-year terms.

This means in the short term, when demand is necessitating so many data centers being built simultaneously in advance of when we can start monetizing them, we'll spend a lot of CapEx and encounter free cash flow headwinds until these data centers come online, can be monetized, and we get a few years into these servers being utilized.

We now believe we will spend approximately $220 billion in cash CapEx in 2026. The higher cost of memory pushing this number up from our prior estimate of about $200 billion. 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.

We long believed AWS could become a few hundred billion-dollar revenue business and now believe it'll be at least double that, and very possibly be a trillion-dollar annual revenue business for us in time, with very appealing accompanying free cash flow and return on invested capital.

This includes the benefit from two items that reduced expenses by approximately $1.2 billion during the quarter. First, we received tariff-related refunds of approximately $600 million. This is included in our North America segment and represents the significant majority of refunds we expect to receive. Second, we recorded a separate benefit of approximately $600 million related to the change in fair value measurement of energy contracts subject to derivative accounting.

We're expanding our deployment of robotics and automation, which have been integral to our operations for decades. We're retrofitting our facilities with our latest generation technology, and we expect to more than double our fleet of robotic arms, like Cardinal and Sparrow, in 2026.

Now turning to our cash CapEx, which is $53.1 billion in Q2. This primarily relates to AWS and generative AI as we invest to support strong customer demand.

we are not the importer of record for the large majority of items sold in our store, given suppliers typically handle imports and pay relevant tariffs. In cases where we did see an increase in cost due to tariffs, we largely absorbed these costs rather than pass them on to customers.

Q3 net sales are expected to be between $197 billion and $202 billion. […] Q3 operating income is expected to be between $22.5 billion and $26.5 billion.

Excluding the impact of Prime Day in both 2025 and 2026, third quarter 2026 year-over-year growth would have been nearly 400 basis points higher.

You're seeing, despite the large investments, AWS margins have continued to remain strong, and we're up 650 basis points year-over-year. 520 basis points if you exclude the derivative accounting gain that I mentioned.

My view of it is that AWS and Amazon can have a wildly successful business without its own frontier model. A lot of that is because there is not going to be one model to rule the world. […] All that said, we are pursuing our own frontier model, and we're doing it for a few reasons. First of which is it just gives us additional control over cost.

we see this adoption curve in AI right now is very barbellled. There is, on one end of the barbell, the AI labs are consuming gobs and gobs of compute, and there are a few runaway successful generative AI applications like Claude Code and ChatGPT. […] On the other end of the barbell are enterprises who are getting real value from AI in cost avoidance and productivity.

We do have an increasing number of customers who are interested in us providing the Trainium chips to them, separate from our cloud, and we're actively having those conversations and exploring, and I expect there's a real chance we'll do that in the future.

You've seen us issue debt this year. We have a lot of options available to us as we continue to fund this growth that we're seeing in AWS. We'll continue to look at all the options and make the appropriate decision at the right time, but nothing to share today.

I think it's no secret right now to any company in the world that there are inflated prices right now on some of the components like memory and hard drives and SSDs.

We have finally found something that is a real needle mover for us in offering perishables in our same-day facilities that we're now able to offer same-day perishables in 2,300 cities around the U.S. If you look in those cities, nine of the top 10 best sellers in those geographies are perishables.