NEW YORK, August 2, 2026, 10:09 a.m. EDT
- Amazon finished Friday up 15.3%, closing at $271.58. Shares rose 17.0% over the week.
- AWS accounted for approximately 78% of Amazon’s year-on-year growth in operating profit.
- Amazon increased its capital expenditure target for 2026 to $220 billion, even as it reported negative free cash flow.
Amazon closed at $271.58 on Friday, jumping 15.3%. The gain far outpaced the wider market. U.S. cash markets did not open on Sunday.
Investor sentiment shifted more clearly than Amazon’s share price. Investors approved Amazon’s higher spending, as cloud profits increased at a quicker pace than cloud revenue.
Amazon Web Services reported a year-on-year sales increase of $11.36 billion, generating $6.46 billion more in operating income. This translates to 56.9 cents of operating profit for every additional dollar in sales. AWS accounted for 78% of Amazon’s growth in total operating profit. These numbers are based on analysis of Amazon’s segment disclosures.
A surge on Friday lifted the week’s overall increase to 17.0% from an initially modest advance.
| Asset | Friday move | Weekly move | Friday close |
|---|---|---|---|
| Amazon | up 15.32% | up 17.00% | $271.58 |
| S&P 500 | up 0.70% | up 1.05% | 7,489.72 |
| Nasdaq Composite | up 1.00% | up 1.59% | 25,373.85 |
Amazon’s weekly return is measured from closing price to closing price starting July 24.
The response marked a shift from February’s outcome. Back then, AWS’s 24% expansion failed to balance a $200 billion spending program, causing Amazon shares to drop 9% in the following session. Now, stronger growth has underpinned the company’s expanded budget.
| Earnings report | AWS growth | 2026 capital plan | Following-session move |
|---|---|---|---|
| Q4 2025, February 5 | 24.0% | About $200 billion | -9.0% |
| Q2 2026, July 30 | 36.7% | About $220 billion | +15.3% |
Stock movements corresponded to overall earnings results rather than just capital expenditure.
Headline earnings for the quarter need revision. Net income totaled $62.6 billion, equivalent to $5.75 per share. This was boosted by a pre-tax gain of $53.4 billion, largely attributed to Anthropic. Operating income increased by 43% to $27.5 billion.
AWS contributed 21% of total revenue while accounting for 60.5% of operating income. The unit’s operating margin increased by 6.5 percentage points to reach 39.4%.
| Segment | Q2 sales | Sales growth | Operating income | Operating margin | Share of operating income |
|---|---|---|---|---|---|
| North America | $116.2 billion | 16% | $9.1 billion | 7.9% | 33.2% |
| International | $42.2 billion | 15% | $1.7 billion | 4.1% | 6.3% |
| AWS | $42.2 billion | 36.7% | $16.6 billion | 39.4% | 60.5% |
Company data is used to determine segment shares.
The retail segment showed further growth. Revenue from online stores increased by 15%, and seller services advanced 16%. Advertising revenue went up by 26% to $19.8 billion.
Other major cloud providers also saw gains. Microsoft Corporation NASDAQ:MSFT posted 43% growth in Azure and related cloud offerings. Alphabet Inc. NASDAQ:GOOGL noted a Google Cloud revenue increase of 82%. Alphabet attributed the reported jump in part to initial TPU system sales.
| Cloud platform | Reported growth | Quarterly revenue disclosed | Operating margin disclosed |
|---|---|---|---|
| AWS | 36.7% | $42.2 billion | 39.4% |
| Azure and other cloud services | 43% | Not listed separately | Not listed separately |
| Google Cloud | 82% | $24.8 billion | 35.6% |
Definitions for reporting vary. Alphabet noted that growth picked up pace, excluding sales of TPU systems.
This quarter, Amazon benefited from large-scale conversion. AWS posted a higher margin than Google Cloud’s 35.6%. Microsoft does not report Azure’s margin separately. As a result, these numbers are indicative and not strictly comparable.
AWS reported a backlog of $496 billion, an increase from $364 billion the previous quarter. Chief Executive Andy Jassy stated 2026 capacity was still inadequate. The majority of 2027 capacity is already allocated, and there are reservations into 2028.
Bill Birmingham at REX Financial stated that investors are currently demanding “visible, near-term revenue and margin expansion.” Amazon achieved both criteria in the latest quarter. Reuters
Amazon provided steady third-quarter guidance, despite a slowdown in reported sales growth. The company projects revenue in the range of $197 billion to $202 billion, with an operating income forecast at $22.5 billion to $26.5 billion. The timing of Prime Day will cut reported growth by almost four percentage points.
With the guidance midpoints, operating margin is set to climb to around 12.3%, compared to about 9.7% a year earlier. This puts the rally to a near-term test.
Risks: The surge is based on continued robust AWS expansion and stable margins. Rising memory expenses may keep capital expenditures high. A slower pace in adding capacity or converting backlog could extend periods of negative free cash flow. Headline earnings are increasingly less reliable for forecasts due to Anthropic-related gains.
Markets will open again on Monday. The ISM manufacturing data for July is due at 10 a.m. EDT. The July employment figures are set for release on Friday at 8:30 a.m. EDT. Both reports could influence rate outlooks for technology stocks.
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