Amazon (AMZN) reported Q2 2026 earnings on July 30, 2026: net sales rose 20% to $200.6 billion, Amazon Web Services (AWS) revenue grew 37% to $42.2 billion, its fastest pace in 18 quarters, and operating income rose 43% to $27.5 billion [1]. Net income was $62.6 billion, or $5.75 per diluted share, but that figure included $53.4 billion of non-operating pre-tax other income, primarily from the company's investments in Anthropic [1]. The stock rose 15.3% to $271.58 on July 31 and closed at $266.43 on August 28, 2026 [2]. This Amazon Q2 2026 earnings recap covers the segments, the AI-driven capex, the valuation, and the third-quarter outlook.
Amazon Q2 2026 earnings: what the company reported
All three segments grew, and all three earned more. North America sales rose 16% to $116.2 billion with operating income of $9.1 billion, up from $7.5 billion. International sales rose 15% to $42.2 billion with operating income of $1.7 billion, up from $1.5 billion. AWS sales rose 37% to $42.2 billion with operating income of $16.6 billion, up from $10.2 billion [1]. AWS therefore produced about 60% of total operating income on about 21% of sales, and its segment margin was about 39%. Advertising services revenue grew 26% to $19.8 billion, subscription services grew 12% to $13.7 billion, and third-party seller services grew 16% to $46.8 billion [1]. Trailing twelve-month net sales reached $775.7 billion, up 16% [1].
| Segment | Q2 2026 sales | Growth | Q2 2026 operating income | Q2 2025 operating income |
|---|---|---|---|---|
| North America | $116.2 billion | Up 16% | $9.1 billion | $7.5 billion |
| International | $42.2 billion | Up 15% | $1.7 billion | $1.5 billion |
| AWS | $42.2 billion | Up 37% | $16.6 billion | $10.2 billion |
| Total | $200.6 billion | Up 20% | $27.5 billion | $19.2 billion |
The Anthropic gain and the cash flow picture
Reported EPS of $5.75 compares with $1.68 a year earlier, but the $53.4 billion of other income is a mark-to-market gain on an investment, not cash from operations [1]. Operating income of $27.5 billion is the cleaner measure of the quarter. Cash flow shows the cost of the AI build-out: operating cash flow for the trailing twelve months was $161.4 billion, up 33%, but purchases of property and equipment over the same period rose 64% to $169.0 billion, leaving trailing free cash flow at negative $7.6 billion [1]. Quarterly capital spending was $54.2 billion, and the company said the increase primarily reflects investments in artificial intelligence [1]. CEO Andy Jassy said the AI and chips businesses each passed an annualized run rate of more than $25 billion [1]. Headcount was 1,595,000, up 3% [1].
Third-quarter 2026 guidance
For Q3 2026 Amazon expects net sales between $197.0 billion and $202.0 billion, growth of 9% to 12%, and operating income between $22.5 billion and $26.5 billion, compared with $17.4 billion a year earlier [1]. The midpoint implies operating income growth of about 41%, in line with the second quarter, while the sales growth range is slower than the 20% just reported. That gap suggests management expects margin expansion to continue even as the retail comparison gets harder.
How AMZN stock reacted to Q2 2026 earnings
The reaction was the strongest of the mega-cap reports this season alongside Microsoft. DataPorium's stock market data shows AMZN closing at $235.50 on July 30 before the after-hours release and rising 15.3% to $271.58 on July 31 on volume of about 129 million shares [2]. The stock reached $284.02 on August 3, its highest close of the period, and then drifted to $266.43 on August 28, 2026, still about 13% above the pre-report close [2]. From mid-June through July 29 the shares had closed between about $227 and $255, so the report broke the stock out of a range that had held for more than six weeks [2].
Amazon valuation after the report
Amazon reported 10,903 million weighted-average diluted shares [1]. At $266.43 that gives a market value of about $2.90 trillion [2]. On trailing twelve-month sales of $775.7 billion the stock trades at about 3.7 times sales, and on annualized second-quarter operating income of $110 billion it trades at about 26 times operating income [1][2]. Trailing GAAP earnings are not a useful yardstick this quarter because of the Anthropic gain. The debate is the same one facing every hyperscaler: $169 billion of trailing capex has pushed free cash flow negative, and the equity is priced on the assumption that AWS growth of 37% and a 39% AWS margin justify the spending. The company's record on retail margins supports that view; North America operating income rose about 21% and International rose about 13% on mid-teens sales growth [1]. Investors may consider that the valuation leaves little room for AWS growth to slow.
- Positives: sales up 20%, operating income up 43%, AWS up 37%, advertising up 26% [1].
- Cautions: trailing free cash flow negative $7.6 billion, capex up 64%, EPS inflated by a $53.4 billion investment gain [1].
- Guidance: Q3 operating income of $22.5 billion to $26.5 billion versus $17.4 billion a year earlier [1].
What to watch next
The Q3 report in late October will show whether AWS holds growth near 37% and whether operating income lands in the guided range. Investors may consider watching the free cash flow line most closely, since a return to positive trailing free cash flow would show that the capex curve is flattening relative to operating cash flow. Comparing Amazon's capex intensity and margins with other large technology companies is possible through DataPorium's stock screener [3].
Amazon's Q2 2026 quarter combined 20% sales growth and 43% operating income growth with negative free cash flow, so the stock's 15% jump was a vote that AWS at 37% growth deserves the capex.
Key takeaways
- Q2 2026 net sales rose 20% to $200.6 billion and operating income rose 43% to $27.5 billion [1].
- AWS grew 37% to $42.2 billion with $16.6 billion of operating income, about 60% of the company total [1].
- EPS of $5.75 included $53.4 billion of pre-tax other income from Anthropic investments; trailing free cash flow was negative $7.6 billion [1].
- AMZN rose 15.3% to $271.58 on July 31 and closed at $266.43 on August 28, 2026, about 3.7 times trailing sales [1][2].
- Q3 2026 guidance: sales of $197.0 billion to $202.0 billion and operating income of $22.5 billion to $26.5 billion [1].
Frequently asked questions
What were Amazon's Q2 2026 earnings?
Amazon reported net sales of $200.6 billion, up 20%, operating income of $27.5 billion, up 43%, and net income of $62.6 billion, or $5.75 per diluted share, which included a $53.4 billion pre-tax gain mainly from Anthropic investments [1].
How fast did AWS grow in Q2 2026?
AWS sales grew 37% year over year to $42.2 billion, the fastest growth in 18 quarters, with operating income of $16.6 billion [1].
Why was Amazon's free cash flow negative in 2026?
Trailing twelve-month purchases of property and equipment rose 64% to $169.0 billion, mostly for AI infrastructure, exceeding operating cash flow of $161.4 billion and leaving free cash flow at negative $7.6 billion [1].
How did Amazon stock react to the Q2 2026 report?
AMZN rose 15.3% to $271.58 on July 31, 2026, reached $284.02 on August 3, and closed at $266.43 on August 28, 2026 [2].
