For the second quarter of 2026, Amazon posted earnings of $5.75 per share. This figure is not directly comparable to the $1.82 per share that analysts from LSEG had forecast. Revenue came in at $200.61 billion, beating the $196.47 billion analysts had estimated.
Shares surged over 6% in after-hours trading immediately following the release.
In the earnings release, Amazon CEO Andy Jassy noted that the cloud division's growth rate was the highest it has been in 18 quarters. Analysts had predicted 31% growth.
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Jassy described AWS as "booming," highlighting that its AI and custom chip divisions have each surpassed an annual run rate of $25 billion in revenue.
The blowout quarter reinforces Amazon's position as a dominant force in two high-margin industries: cloud computing and digital advertising. AWS, in particular, has been a key beneficiary of the corporate rush to adopt generative AI, with companies spending heavily on infrastructure to train and deploy models. Amazon's homegrown chips - like Trainium and Inferentia - give it a cost advantage over rivals and help lock in customers.
This rapid expansion in AWS is driven largely by enterprises accelerating their adoption of generative AI, requiring substantial computing power. Amazon's investment in custom silicon like Trainium and Inferentia positions it to capture this demand while maintaining margins, as these chips are designed specifically for AI workloads, reducing reliance on Nvidia's expensive GPUs. Additionally, the advertising segment's growth reflects Amazon's unique advantage in leveraging purchase intent data, which traditional ad platforms lack. Such tailwinds suggest the company's profitability trajectory could remain strong even as rivals invest heavily.
Meanwhile, the advertising business continues to chip away at the duopoly of Google and Meta by using Amazon's unrivaled shopping data to target consumers. The combined strength of these segments lifted overall profitability and drove the stock's sharp after-hours move. Investors will now watch whether this momentum can hold as competition intensifies and macroeconomic uncertainties persist.
Amazon's heavy investment in custom AI chips has been a key differentiator, allowing the company to offer cost-effective cloud services and maintain its lead over Microsoft Azure and Google Cloud. The strong advertising revenue further demonstrates Amazon's ability to monetize its e-commerce platform through targeted ads, leveraging its vast trove of consumer purchase data to fend off rivals.
The exceptional quarter underscores Amazon's ability to profit from two high-growth arenas simultaneously. Analysts had expected slower growth from AWS due to increased competition from Microsoft Azure and Google Cloud, but Amazon's investment in custom AI chips appears to be paying off. The advertising segment continues to benefit from the company's vast e-commerce data, allowing it to challenge the digital ad duopoly.
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