Amazon Raises 2026 Capex to $220 Billion on Strong AI Demand

Amazon reported strong second-quarter 2026 financial results, driven by surging artificial intelligence demand and robust cloud computing growth. The company raised its full-year 2026 capital expenditure forecast to $220 billion, a significant increase from its previous $200 billion projection. CEO Andy Jassy attributed the upward revision to escalating memory costs and the ongoing need to expand infrastructure to meet unprecedented enterprise demand. Jassy cautioned that the spending surge would not decelerate, noting that Amazon already lacks sufficient capacity to satisfy 2026 and 2027 workloads, with demand extending into 2028. AWS revenue expanded 37 percent year-over-year, outpacing Wall Street expectations of 31 percent growth and marking the segment's fastest expansion since 2021. The cloud division recorded a contracted backlog of $496 billion, underscoring sustained enterprise adoption. Amazon also highlighted its internal semiconductor and AI platform divisions, both now exceeding a $25 billion annual revenue run rate. Despite the impressive top-line growth, the aggressive infrastructure buildout has pressured profitability metrics. Quarterly capital expenditures reached $54.2 billion, up from $32.1 billion a year earlier, pushing trailing-twelve-month free cash flow into a $7.6 billion deficit compared to an $18.2 billion surplus during the prior period. Net income for the quarter totaled $62.6 billion, or $5.75 per share, reflecting a substantial rebound from $18.2 billion a year earlier. A significant portion of this profit includes $53.4 billion in pre-tax gains from Amazon’s investments in AI startup Anthropic. On a per-fundamental basis, core operations faced headwinds from a shifted Prime Day promotion, which moved to June and created unfavorable year-over-year comparisons. Excluding the event, third-quarter 2026 revenue growth would be approximately 400 basis points higher. The company provided Q3 revenue guidance between $197 billion and $202 billion, below the $204.1 billion consensus, while projecting third-quarter operating income of $22.5 billion to $26.5 billion. Beyond cloud and investments, Amazon’s North American retail segment generated $116.2 billion in revenue, a 16 percent annual increase bolstered by the early Prime Day event. U.S. online retail sales grew 9 percent across the promotion week. The company also reported accelerated growth in its healthcare initiatives, more than doubling its online pharmacy customer base and increasing same-day prescription deliveries by nearly fivefold. Following the earnings release, Amazon shares rose more than 10 percent in extended trading, reflecting investor confidence in the cloud leader’s AI-driven trajectory despite near-term cash flow constraints.