Amazon AI Bet Pays Off as Q2 Earnings Crush Expectations: How Will Stock React?

Amazon beat Wall Street on every headline metric in the second quarter, and Amazon Web Services grew 37% year over year, its fastest pace in 18 quarters.

Shares closed the regular session at $235.50, up 3.90%. The stock then climbed to $256.33 in after-hours trading, a further 8.85% gain, once the numbers landed Thursday.

Why the Amazon Q2 Earnings Beat Matters

Net sales reached $200.6 billion, up 20% from $167.7 billion a year earlier. Analysts had modeled roughly $197 billion.

Operating income rose 43% to $27.5 billion. That lifted the operating margin to 13.7% from 11.4%, against a consensus near 12%.

Diluted earnings landed at $5.75 per share versus estimates around $1.82. However, that comparison flatters the quarter.

Amazon booked $53.4 billion of non-operating pre-tax other income, primarily from its stake in Anthropic, the AI lab behind the Claude models. Strip out that revaluation and the operating result still clears the bar.

AMAZON $AMZN JUST REPORTED Q2 EARNINGS• Revenue: $200.6B, beating expectations of $196.47B 🟢• EPS: $5.75, beating expectations of $1.82 🟢• AWS revenue: $42.2BQ3 guidance:• Revenue: $197B-$202B, below expectations of $204.07B 🔴• Operating income: $22.5B-$26.5B vs… pic.twitter.com/aa9kiCoszk

— WOLF (@WOLF_Financial) July 30, 2026

Context matters here. Microsoft’s Azure business grew 43% a day earlier, while Meta watched AI spending squeeze margins to 31% from 43%. Investors wanted to know which camp Amazon fell into.

AWS Acceleration Validates the $200 Billion AI Bet

AWS sales hit $42.2 billion, a $169 billion annualized run rate. Growth of 36.7% was the segment’s strongest since 2021.

Profitability moved with it. AWS operating income jumped 64% to $16.6 billion, and the segment margin widened to 39.4% from 32.9%. Amazon therefore bought that acceleration without cutting prices.

“AWS is booming, growing 36.7% year-over-year in Q2 … and our AI and Chips businesses each eclipsed run rates of more than $25 billion,” Andy Jassy, President and CEO of Amazon, in the earnings release.

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Both businesses grew at triple-digit rates. Anthropic and OpenAI have made multi-gigawatt compute commitments to Trainium, Amazon’s in-house AI training chip.

Free Cash Flow Turns Negative as Capex Climbs

The bill is plain to see. Amazon spent $54.2 billion on property and equipment during the quarter alone.

Trailing twelve-month purchases reached $169 billion, a 64% increase. Free cash flow swung to an outflow of $7.6 billion over that period, from an $18.2 billion inflow a year earlier.

Operating cash flow still grew 33% to $161.4 billion, so the draining free cash flow reflects construction rather than weakness in the underlying business.

Guidance handed skeptics something, though. Amazon expects third-quarter sales between $197 billion and $202 billion, short of the roughly $204 billion analysts wanted. Prime Day timing explains nearly 400 basis points of the shortfall, the company said.

Investors who question AI capex returns now face a harder argument. The open question is whether AWS can defend 37% growth once the comparison base rises next year.