NEW YORK, July 29, 2026, 18:04 EDT
Amazon.com NASDAQ:AMZN heads into Thursday’s results following a five-day drop of 7.4%. That fall is steeper than the almost 6% change that options markets anticipated around earnings. U.S. markets are not currently open. The stock closed at $226.65, then fell 0.8% more in after-hours trade.
The pre-earnings adjustment changes expectations. A typical sales outperformance might not be enough this time. Investors are seeking accelerated AWS growth, while wanting to avoid further cash-flow pressures from artificial intelligence investments.
According to initial Visible Alpha forecasts, second-quarter revenue is projected at $196.75 billion. AWS revenue is expected to reach $40.49 billion, marking an increase of over 30%. Another consensus forecast places AWS’s operating margin at 33.8%.
Based on those figures, AWS operating profit is estimated at $13.69 billion, making up 62% of Amazon’s projected $22 billion operating income at the midpoint of its guidance. One percentage point of AWS margin corresponds to approximately $405 million.
| Measure | Q2 2025 actual | Q1 2026 actual | Q2 2026 preliminary/guidance |
|---|---|---|---|
| Total revenue | $167.70 billion | $181.52 billion | $196.75 billion |
| AWS revenue | $30.87 billion | $37.59 billion | $40.49 billion |
| AWS year-on-year growth | 17% | 28% | Above 30% |
| AWS operating margin | 32.9% | 37.7% | 33.8% |
| AWS operating income | $10.16 billion | $14.16 billion | $13.69 billion |
| Group operating income | $19.17 billion | $23.85 billion | $22.00 billion |
Based on early projections for AWS revenue and margins.
This reflects the midpoint of Amazon’s guidance range of $20 billion to $24 billion. Reported numbers are from the company; future estimates are still subject to change.
AWS is projected to account for just 21% of anticipated revenue, but may generate around 60% of overall operating profit. This concentration heightens the importance of maintaining margin discipline.
If the first-quarter margin of 37.7% is maintained, it would boost results by roughly $1.58 billion compared to consensus, assuming other factors stay the same. Dan Romanoff, an analyst at Morningstar NASDAQ:MORN, said, “AWS is the story, and AI is driving AWS.” He cautioned that higher depreciation could impact cloud margins. TradingView
The pace of growth continues to increase. AWS saw a 28% expansion in the first quarter, following 17% growth in the same period the previous year. Early Q2 forecasts suggest growth will exceed 30%.
Microsoft NASDAQ:MSFT provided a clear example of what appeals to investors. Azure’s revenue increased by 43%, surpassing the consensus forecast of 39.98%. Shares rose approximately 4% in after-hours trading. The company reported capital expenditures of $41 billion for the quarter.
A week before, Alphabet NASDAQ:GOOGL highlighted a different trend. Google Cloud’s revenue increased by 82%, while Alphabet announced an increase in its 2026 capital expenditures to between $195 billion and $205 billion. Shares dropped roughly 3% in after-hours trading. Free cash flow came in at minus $5.9 billion.
Amazon’s cash conversion has declined. Operating cash flow over the trailing period increased by 30% to reach $148.5 billion. However, free cash flow dropped sharply, down to $1.2 billion from $25.9 billion. Amazon said this fall was primarily driven by a $59.3 billion rise in equipment spending for AI.
Credit investors remain wary. Amazon’s dollar bond issue in March saw demand at about 3.4 times the available amount, while interest for its July issuance dropped to 1.6 times coverage. This reduced appetite is making it more expensive for the company to support ongoing infrastructure growth.
Headline sales could reveal limited information. The $196.75 billion projection is just $250 million higher than the midpoint of Amazon’s own outlook. That forecast had already included a Prime Day happening within the same quarter.
Risks: AWS expanding by less than 30%, reduced margins or increased expenses may prolong the decline. Improved cloud growth alongside steady investment may prompt a rebound.
Amazon is set to announce results after markets close on Thursday, with its earnings call scheduled for 5 p.m. EDT. Investors on Friday will gauge if the 7.4% pullback has already accounted for concerns over spending.
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