Amazon.com (NASDAQ:AMZN) reported second-quarter revenue of $200.6 billion, up 20% year over year excluding foreign-exchange effects, while operating income rose 43% to $27.5 billion. CEO Andy Jassy highlighted accelerating growth at Amazon Web Services, expansion in faster retail delivery and grocery offerings, and growing advertising revenue.
Chief Financial Officer Brian Olsavsky said quarterly operating income included approximately $1.2 billion of benefits that reduced expenses: about $600 million in tariff-related refunds, recorded in the North America segment, and roughly $600 million from changes in the fair value of energy contracts, primarily affecting AWS.
AWS growth accelerates as AI demand expands
Jassy said AWS is seeing growth in both artificial intelligence workloads and its core cloud services. He attributed the connection in part to demand for computing, storage and databases associated with AI applications, including post-training, reinforcement learning and agent-related tools.
Amazon’s chips business reached an annual revenue run rate above $25 billion and was growing at a triple-digit percentage rate, Jassy said. AI revenue also surpassed a $25 billion annualized run rate. He said the company’s Trainium AI chips and Graviton central processing units were contributing to demand, noting that Graviton is used by 98% of AWS’s top 1,000 EC2 customers.
During the question-and-answer session, Jassy said Amazon expects to double its power capacity by the end of 2027 compared with 2025 levels. He said much of the capacity planned for 2027 is already reserved, while Amazon has also received substantial customer commitments for 2028.
Olsavsky said AWS’s operating margin was supported by growth, capacity optimization, efficiency gains and management of fixed costs. He cautioned that margins could fluctuate based on investment levels and changes in the mix of AI and non-AI products. AWS’s margin improved 650 basis points year over year, or 520 basis points excluding the energy-contract accounting benefit, he said.
Capital spending rises to support capacity buildout
Amazon spent $53.1 billion in cash capital expenditures during the second quarter, primarily on AWS and generative AI infrastructure. Jassy said the company now expects approximately $220 billion in cash capital expenditures in 2026, up from an earlier estimate of about $200 billion, with the increase driven by higher memory costs.
Jassy said Amazon still expects demand to exceed its available capacity in 2026 and believes that dynamic will continue into 2027. He described data centers as long-lived investments that can be used for more than 30 years, while servers and networking equipment typically reach break-even in less than three years and have useful lives of at least five to six years.
“At this level of spend and higher, we have clear line of sight to strong financial returns,” Jassy said, adding that the company expects revenue growth to eventually exceed incremental capital-expenditure growth as data centers come online and utilization expands.
Amazon is also developing its own frontier AI model, though Jassy said AWS can succeed without relying on a single proprietary model. He said Amazon Bedrock provides customers access to multiple models, including models from other providers and open-source offerings. Amazon expects its own model to be among at least a half-dozen comparably capable models available through Bedrock in the coming years, he said.
Stores, grocery and delivery initiatives advance
Amazon’s North America segment reported revenue of $116.2 billion, up 16% year over year, and operating income of $9.1 billion, producing a 7.9% operating margin. International revenue reached $42.2 billion, up 15% excluding foreign exchange, while segment operating income was $1.7 billion with a 4.1% margin.
Worldwide paid units grew 17% year over year, Olsavsky said. The company cited growth in selection, pricing and delivery speed, while continuing to optimize inventory placement, shipping distances, package handling and shipment consolidation. Amazon expects to more than double its fleet of robotic arms, including Cardinal and Sparrow systems, during 2026.
Jassy said Amazon delivered more than 40% more items through same-day or overnight delivery globally in the first half than it did in the comparable 2025 period. Amazon Now, its service for delivery within 30 minutes or less, added 80 U.S. cities and towns and several major Egyptian cities in the second quarter. The service is now offered in nine countries and more than 250 cities and towns, he said.
The company also pointed to momentum in groceries and perishables. Monthly active customers purchasing perishables increased more than 50% since the start of the year, while same-day orders containing perishables averaged more than three times as many units per order. Jassy said Amazon can offer same-day perishables in 2,300 U.S. cities and that nine of the top 10 best-selling items in those locations are perishables.
Advertising revenue climbs; third-quarter outlook issued
Amazon Ads revenue increased 26% year over year to $19.8 billion. Jassy said Sponsored Products remained the largest advertising offering, while the company also saw growth in Prime Video advertising and live sports inventory. Amazon said advertisers using its Ads Agent targeting tool saw 8% lower cost per impression and 6% lower cost per acquisition.
For the third quarter, Amazon forecast net sales of $197 billion to $202 billion and operating income of $22.5 billion to $26.5 billion. Olsavsky said the comparison will be affected by the timing of Prime Day, which occurred in the second quarter this year but was entirely in the third quarter of 2025. Excluding Prime Day timing in both periods, third-quarter year-over-year growth would be nearly 400 basis points higher, he said.
The company’s third-quarter sales outlook also assumes an approximately 80-basis-point unfavorable effect from foreign exchange rates based on current rates.
About Amazon.com (NASDAQ:AMZN)
Amazon.com, Inc is a diversified technology and retail company best known for its e-commerce marketplace and broad portfolio of consumer and enterprise services. Founded by Jeff Bezos in 1994 and headquartered in Seattle, Washington, the company launched as an online bookseller and expanded into a global retail platform that sells products directly to consumers and provides a marketplace for third-party sellers. Over time Amazon has grown beyond retail into areas including cloud computing, digital media, devices and logistics.
Key businesses and offerings include Amazon’s online marketplace and fulfillment services, the Amazon Prime membership program (which bundles expedited shipping with streaming and other benefits), Amazon Web Services (AWS) which supplies on-demand cloud computing and storage to businesses and public-sector customers, and a range of content and advertising services such as Prime Video and Amazon Advertising.
