- Amazon reported net sales of $200.6 billion and a profit of $62.6 billion, or $5.75 per share, compared to $1.82 per share and net sales of $196.43 billion expected by Wall Street.
- The tech giant raised its 2026 spending forecast from $200 billion to $220 billion due to higher memory costs, with the majority going towards AI and Amazon Web Services.
- Shares jumped more than 9% in after-hours trading on Thursday
Shares of Amazon climbed over 9% in after-hours trading on Thursday after the tech giant unveiled plans to spend $20 billion more in 2026, which will primarily be put towards supporting AI and its Amazon Web Services business.
The company raised its capital expenditures forecast from $200 billion to $220 billion for 2026 due to higher memory costs. Amazon CEO Andy Jassy told analysts that the company has a “clear line of sight to strong financial returns” on its AI bet and predicted that AWS could eventually become a trillion dollar annual revenue business due to “striking” demand for the technology.
Also fueling the gains were second-quarter earnings that smashed Wall Street expectations, with profit more than tripling to $62.6 billion and net sales increasing 20% to $200.6 billion in its second quarter.
That profit included $53.4 billion in “non-operating pre-tax other income,” primarily from its investment in Anthropic. Meanwhile, its net sales were fueled by 16% growth in North America, 15% growth internationally and 37% growth in AWS, which is now a $169 billion annualized revenue run rate business.
Elsewhere, advertising services revenue, which includes sales to sellers, vendors, publishers, authors and others through programs such as sponsored ads, display and video advertising, continued to be a bright spot, growing 16% to $19.81 billion.
Net sales in the subscription services segment, which includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book and other non-Amazon Web Services subscription services, also rose 12% to $13.73 billion.
Looking ahead, total net sales are expected to grow 9% to 12% to somewhere between $197 billion and $202 billion in the third quarter, while operating income is expected to be between $22.5 billion and $26.5 billion, compared with $17.4 billion in the prior-year period.
Amazon CEO predicts AI demand will help AWS will grow into trillion-dollar revenue business
Amazon’s AWS AI and chips businesses both exceeded annual revenue run rates of $25 billion, or triple-digit percentage growth year over year. During the quarter, new AWS agreements were struck with Warner Bros. Discovery, Pinterest and the WNBA, among others.
Jassy noted that capital is invested in AI data centers two years prior to when it can put servers into them and start generating “significant revenue.” He added that the servers are typically purchased a few months prior to putting them into service, giving them “strong visibility into customer demand before we trigger the spend,” and take a little less than three years to break even on the 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. That means that we’re driving significant free cash flow on the servers and networking equipment in the two to three years after we break even,” Jassy explained. “As we get a few years out, the revenue growth outpaces the incremental capex growth, which will happen at some point.”
Despite the higher spending, Jassy warned that it will still not have enough capacity to meet AI demand in 2026 or 2027. He added that demand for 2028 is “striking” and that they expect AWS to at least double its previous projection of becoming a $2oo billion revenue business.
“[It can] 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,” he said.
Amazon touts ‘Off Campus,’ NBA, NASCAR viewership, AI-powered advertising agent tool
Entertainment highlights during the quarter included “Off Campus” becoming Prime Video’s No. 3 top-viewed series debut ever with 36 million viewers for its series premiere in the first 12 days.
It also delivered a peak of 6.5 million U.S. viewers for Game 7 of the Eastern Conference Semifinals, outperforming the 2025 broadcast, and saw NBA viewership hit the highest average viewership on record in Europe, more than doubling year over year. Additionally, NASCAR on Prime Video averaged 2.3 million viewers in its second season and has attracted the youngest audience the last two years among broadcasters since 2017.
In April, Amazon Chief Financial Officer Brian Olsavsky said that Prime Video has grown into a “larger and profitable business in its own right.” The streaming service’s ad tier reaches over 315 million monthly active users globally, including more than 130 million in the United States alone.
Other countries where the ad tier is available include Australia, Austria, Brazil, Canada, France, Germany, India, Italy, Japan, Mexico, New Zealand, The Netherlands, Spain, Sweden and the U.K. In addition to its ad-supported tier, Prime Video users can pay a fee of $4.99 per month to upgrade to an ad-free experience — an increase from its previous $2.99 per month fee.
Executives said more than 30 new advertisers were introduced to the NBA in Amazon’s first year, while inventory on Thursday Night Football, the NBA, WNBA and NASCAR all sold out. Multi-sport viewers are driving 12% higher spend and 17% more orders on Amazon, while multi-sport advertisers are seeing 2.3 times higher unduplicated reach compared to single-sport advertisers.
During the quarter, Amazon also expanded its AI-powered Ads Agent tool to 11 new countries so far, which simplifies planning, launching, and managing advertising campaigns and turns hours of setup and targeting into minutes. Advertisers using the tool have seen 8% lower cost-per-impression and 6% lower cost-per-acquisition than those that don’t use it.
Amazon Ads will host their annual UnBoxed advertising conference from Sept. 28 to 30 at the Moscone West Convention Center in San Francisco.
