Amazon Stock Jumps 9% as AWS Growth Hits 37% and Revenue Tops $200 Billion
Amazon earnings: AMZN stock jumps 9% as AWS growth and profit beat forecasts, outweighing higher AI spending and negative free cash flow.
Amazon shares surged above $257 after record sales and accelerating AWS growth showed that its enormous investment in artificial intelligence is producing returns.
Amazon Earnings Send AMZN Above $250
Amazon (NASDAQ: AMZN) delivered the cloud acceleration investors demanded, sending its shares sharply higher despite another increase in artificial-intelligence spending.
AMZN gained 3.90% to close at $235.50 before advancing another 9.14% to $257.06 in overnight trading. The rally added more than $21 to the stock and pushed it through a dense cluster of technical resistance between $237 and $247.
Second-quarter revenue reached $200.6 billion, comfortably exceeding Wall Street’s estimate of approximately $196.5 billion. Amazon Web Services was the decisive result: AWS revenue increased 36.7% to $42.2 billion, its fastest growth in 18 quarters and well above forecasts near $40.5 billion.
The performance gave investors evidence that Amazon’s heavy data-center and chip spending is translating into revenue and profit—not simply consuming cash.
Amazon Earnings: Quick Overview
- Net sales increased 20% to $200.6 billion.
- Operating income rose 43% to $27.5 billion.
- AWS revenue jumped 37% to $42.2 billion.
- AWS operating income reached $16.6 billion.
- Advertising revenue increased 26%.
- GAAP net income hit $62.6 billion, boosted by a $53.4 billion pre-tax investment gain.
- Trailing free cash flow fell to negative $7.6 billion.
- Amazon raised expected 2026 capital spending from $200 billion to approximately $220 billion.
- AMZN jumped above $257, clearing every moving average listed on its pre-earnings four-hour chart.
Revenue Breaks Above $200 Billion
Amazon’s net sales increased 20% from $167.7 billion a year earlier to $200.6 billion, beating both consensus estimates and the midpoint of management’s guidance.
North American sales rose 16% to $116.2 billion, while international sales increased 15% to $42.2 billion. North American operating income improved to $9.1 billion from $7.5 billion, and the international business generated $1.7 billion in operating income compared with $1.5 billion last year.
The retail business benefited partly from the timing of Prime Day, which fell in the second quarter this year rather than the third. That calendar shift helped sales, but it does not fully explain the strength across Amazon’s businesses.
Advertising revenue increased 26%, providing another high-margin source of growth outside AWS. Amazon also reported record Prime delivery speeds, with more than 40% additional items delivered on the same day or overnight during the first half of the year.
The result was broad enough to show that Amazon’s growth was not limited to a single division. Nevertheless, AWS remains the segment that matters most to the investment case.
AWS Growth Accelerates to 37%
AWS generated $42.2 billion in quarterly revenue, up nearly 37% year over year and above expectations of roughly $40.5 billion. Growth accelerated sharply from 28% in the first quarter.
That was AWS’s fastest expansion since 2021.
Operating income from the cloud division increased to $16.6 billion from $10.2 billion a year earlier, beating forecasts near $13.6 billion. AWS produced approximately 60% of Amazon’s total operating profit despite contributing only about 21% of company revenue.
Its operating margin reached approximately 39.4%, calculated from the reported segment figures. That was stronger than investors expected, particularly as new AI infrastructure normally carries substantial depreciation and start-up costs.
Amazon said AWS has reached a $169 billion annualized revenue run rate. Its AI cloud business and custom-chip operation have each exceeded annualized revenue of $25 billion, with both growing at triple-digit rates.
In Amazon’s official second-quarter release, CEO Andy Jassy described AWS as “booming.” Demand from customers building and deploying AI applications is supporting Amazon’s investment in data centers, Trainium chips, Graviton processors and its Bedrock platform.
This was the proof point investors wanted: Amazon is spending aggressively, but AWS growth and profitability are accelerating at the same time.
AI and Chips Become $25 Billion Businesses
Amazon’s AI infrastructure strategy extends beyond renting conventional cloud capacity.
The company’s Trainium processors compete with Nvidia hardware by offering AWS customers a lower-cost option for training and running AI models. Anthropic and OpenAI have made multi-year, multi-gigawatt commitments involving Trainium, while Meta agreed to use hundreds of thousands of Amazon’s Graviton chips.
Amazon said Graviton is used by 98% of its top 1,000 EC2 customers. Revenue commitments for the chip increased almost threefold from the previous quarter.
Bedrock, which gives customers access to foundation models from multiple developers, also continues to expand. Amazon said hundreds of thousands of customers now use the service, with more customers added during the past six months than in Bedrock’s first two years.
This model-neutral strategy is important. Amazon does not need its proprietary Nova models to dominate the industry if AWS becomes the infrastructure layer through which businesses access AI models, agents and custom chips.
Headline EPS Inflated by Anthropic Gain
Amazon reported net income of $62.6 billion, or $5.75 per diluted share, compared with $18.2 billion and $1.68 per share a year earlier.
However, those numbers require context.
Second-quarter net income included $53.4 billion of non-operating pre-tax income, primarily from an increase in the value of Amazon’s Anthropic investment. Because that gain is not part of normal business operations, comparing the reported $5.75 EPS directly with conventional analyst estimates would overstate the underlying earnings beat.
Operating income offers a cleaner measure. It rose 43% to $27.5 billion from $19.2 billion, demonstrating that the core business improved substantially even without the investment gain.
Investors therefore did not need the Anthropic revaluation to justify the positive reaction. AWS revenue, cloud margins and consolidated operating income were all strong.
Amazon Raises AI Spending to $220 Billion
The largest concern remains capital expenditure.
Amazon spent $54.2 billion on capital projects during the quarter, up approximately 68% and above expectations near $49.4 billion. Management now expects 2026 capital spending of roughly $220 billion, up from its previous estimate of $200 billion.
That increase would normally risk a negative market reaction. Investors recently punished other technology companies when higher AI budgets were not matched by equally convincing growth or cash returns.
Amazon avoided that outcome because AWS accelerated and produced substantially more operating profit than expected.
Still, the cash-flow cost is significant. Trailing 12-month operating cash flow increased 33% to $161.4 billion, but free cash flow deteriorated from positive $18.2 billion to an outflow of $7.6 billion. Amazon attributed the decline mainly to a $66.1 billion year-over-year increase in property and equipment purchases, largely connected to AI.
The next test is whether AWS can maintain growth above 30% while new infrastructure begins generating cash.
Q3 Guidance Points to Slower Headline Growth
Amazon expects third-quarter revenue of $197 billion to $202 billion, representing growth of 9% to 12%.
The slowdown partly reflects the movement of Prime Day into the second quarter. Amazon said Q3 growth would be almost four percentage points higher after excluding Prime Day from both years.
Operating income is expected to range from $22.5 billion to $26.5 billion, compared with $17.4 billion in the third quarter of 2025.
The guidance therefore points to continued profit growth, although investors will remain sensitive to AWS margins, depreciation and the pace of capital spending.
AMZN Technical Analysis: Earnings Gap Breaks Resistance
Amazon’s pre-earnings four-hour chart was mixed to bearish. The stock closed at $235.50 below its 20-, 50-, 100- and 200-period moving averages, while MACD and momentum carried sell signals.
The overnight jump to $257.06 has materially changed that structure.
AMZN has now cleared the 20-period EMA at $237.02, the 50-period EMA at $241.13, the 200-period EMA at $241.83 and the 100-period SMA at $246.61. That creates a bullish earnings gap and turns the former $237–$247 resistance cluster into potential support.
The pre-report RSI of 46.48 was neutral, meaning the stock was not overbought before the rally. However, those indicators do not yet incorporate the full overnight move and will rise sharply when regular trading resumes.
The key technical levels are:
- Immediate support: $246–$247
- Secondary support: $241–$242
- Major gap support: $235–$237
- Immediate resistance: $260
- Next upside targets: $265 and $275
- Bullish signal: Holding above $246 after the opening volatility
- Bearish signal: Closing the earnings gap below $235
A pullback that holds between $246 and $250 would preserve the breakout. A move back below $241 would suggest the initial reaction was losing strength, while a complete gap reversal under $235 would invalidate the bullish setup.
What to Expect From Amazon (AMZN) in Q3
Amazon delivered the combination the market wanted: faster AWS growth, stronger cloud profitability and clear evidence that AI demand is generating revenue.
Negative free cash flow and a $220 billion investment plan remain substantial risks. But unlike companies whose spending is running ahead of monetization, Amazon showed an immediate connection between infrastructure investment and accelerating AWS results.
The post-earnings surge above $257 breaks the previous bearish technical structure. If AMZN holds above $246, the breakout can extend toward $260, $265 and potentially $275. The burden now shifts to Amazon to sustain AWS growth while converting its unprecedented AI investment into free cash flow.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
Related Articles
Sidebar rates
Related Posts
Save