New York, August 31, 2026, 04:58 (EDT)
- Amazon shares gained roughly 4% on Friday, trading close to $266.43 during early premarket hours.
- AWS revenue climbed 37% to $42.2 billion, marking its quickest growth rate in 18 quarters.
- Amazon raised its planned capital spending for 2026 to about $220 billion.
- Free cash flow in the trailing period fell to negative $7.6 billion.
Amazon.com (NASDAQ: AMZN) rose roughly 4% on Friday following an analyst upgrade that emphasized the possibilities for agentic AI to enhance retail operations. Shares were around $266.43 as of 04:37 EDT Monday.
The increase boosted Amazon’s market value by about $110 billion. It also renewed focus on the primary valuation issue: can faster AWS profit growth support the sector’s biggest AI expansion.
AWS posted the growth investors had been seeking. Revenue in the second quarter climbed 37% to $42.2 billion, while operating income for the segment jumped 63% to $16.6 billion.
As a result, AWS accounted for 60% of Amazon’s $27.5 billion operating profit, despite making up just 21% of total sales for the company. The unit’s operating margin increased to 39.3%, compared to 33.1% in the same period last year.
| Q2 2026 measure | Value | Year-over-year | Investor signal |
|---|---|---|---|
| Group revenue | $200.6bn | +20% | Widespread expansion |
| AWS revenue | $42.2bn | +37% | Strongest rate in 18 quarters |
| AWS operating profit | $16.6bn | +63% | Supports AI spending |
| Ad revenue growth | Not broken out here | +26% | Boosts profitability |
| Trailing free cash flow | −$7.6bn | $25.8bn lower | Pressure from capital investment |
The impact is apparent. Spending on property and equipment rose by $66.1 billion over the past year. Free cash flow shifted from a positive $18.2 billion to a negative $7.6 billion.
Amazon is now expecting to spend about $220 billion on capital projects in 2026. The planned investments focus on AI infrastructure, chips, robotics, and satellites. This figure is higher than the company’s earlier plan of $200 billion.
A new commercial development was announced by NVIDIA (NASDAQ: NVDA). The company reported that AWS is set to add another two million GPUs by early 2029. Additionally, Amazon will adopt NVIDIA’s physical-AI stack for its warehouse robotics.
Amazon’s AI division and custom-chip operations have both surpassed $25 billion in yearly revenue run rates. Chief Executive Andy Jassy reported that AWS’s growth rate was the highest it has been in 18 quarters.
The stock’s valuation initially appears moderate, with Amazon trading at about 21.4 times trailing earnings. But second-quarter net profit factored in a $53.4 billion investment gain tied to Anthropic.
Operating income offers a clearer measure. With a current market capitalization near $2.90 trillion, the stock trades at approximately 26 times the annualized operating profit from the second quarter.
Risks: Possible delays in returns may result from GPU supply issues, power limitations, and depreciation. A decline in AWS demand would widen the free cash flow gap. Conversely, a quicker pace in retail automation could have the opposite effect.
Friday’s rally reflects expectations around delivery. AWS needs to sustain growth close to 37%, with its 39% margin supporting a $220 billion investment plan, all without causing lasting pressure on cash flow.
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