Amazon Earnings Beat on AI-Driven Cloud Growth
Amazon earnings Q1 2026 showed revenue beat as AWS AI demand lifted profit while a $200.0 billion AI capex plan compresses free cash flow.
KEY TAKEAWAYS
- Net sales reached $181.5 billion, up 17% year-over-year.
- AWS revenue rose 28% and accounted for more than 20% of total sales.
- About $200.0 billion in AI capex pressured free cash flow to $1.2 billion TTM.
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Amazon.com Inc. (AMZN) reported earnings for the quarter ended March 31, 2026, on April 29, 2026, with revenue surpassing expectations as AWS expansion linked to artificial-intelligence demand accelerated. This growth boosted profit but also led to increased capital spending that has reduced free cash flow.
Q1 Results and Cash Flow
Amazon said in a Business Wire press release that net sales reached $181.5 billion, up 17% year-over-year and 15% on a currency-adjusted basis, exceeding consensus estimates near $177 billion. Net income rose to $30.3 billion, or $2.78 a diluted share, including pre-tax gains of $16.8 billion from investments in Anthropic.
Operating cash flow on a trailing 12-month basis climbed 30% to $148.5 billion. However, free cash flow fell to $1.2 billion from $25.9 billion a year earlier, driven by a $59.3 billion increase in property and equipment purchases.
North America segment sales rose 12% to $104.1 billion. AWS revenue grew 28% year-over-year, accounting for more than 20% of Amazon’s total revenue, marking its fastest growth pace in 15 quarters.
Outlook and AI Investment
In an 8-K filing, Amazon gave second-quarter 2026 net sales guidance of $194.0 billion to $199.0 billion, implying 16% to 19% growth year-over-year, with operating income projected between $13.0 billion and $17.5 billion. Analysts estimate AWS revenue near $37 billion for the quarter, about 25% growth.
Amazon flagged roughly $200 billion in capital expenditures for 2026, primarily focused on AI infrastructure. This program explains the surge in property and equipment purchases and the resulting pressure on free cash flow.
The company’s chips business—including Graviton, Trainium, and Nitro—has surpassed a $20 billion annual revenue run rate and is growing at triple-digit percentages year-over-year. Amazon said it delivered more than 2.1 million AI chips in the past 12 months, with over half being Trainium. It expects to receive more than 1 million NVIDIA GPUs in 2026.
Customer commitments include Anthropic’s up-to-5 gigawatt Trainium arrangement, Meta’s purchase of tens of millions of Graviton cores, and a multi-gigawatt OpenAI Trainium commitment expected to ramp in 2027.
Together, the raised sales outlook and the large AI-focused capital program link current revenue and profit momentum to a sustained hardware and infrastructure buildout, while signaling continued pressure on free cash flow in the near term.
