Amazon’s AWS growth jumps to 37% as Jassy raises 2026 capex plan to $220 billion

Amazon.com Inc. reported AWS revenue rose 37% to $42.2 billion in the second quarter, its fastest growth in 18 quarters, and raised its 2026 capital expenditure plan to about $220 billion from roughly $200 billion, citing higher memory costs. CEO Andy Jassy said the acceleration validates the company's AI infrastructure spending, as AWS operating income climbed to $16.6 billion and shares gained about 9% in after-hours trading despite a cautious third-quarter sales forecast.

Amazon’s AWS growth jumps to 37% as Jassy raises 2026 capex plan to $220 billion - AWS revenue rose 37% to $42.2 billion, its fastest growth in 18 quarters, while AWS operating income climbed to $16.6 billion. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ - Amazon now expects about $220 billion in 2026 cash capital expenditures, up from roughly $200 billion, largely because of higher memory costs. 2 https://apnews.com/article/amazon-second-quarter-earnings-cloud-b4ce02b4666a35b8975823c5c22072ee - Trailing 12-month free cash flow swung to a $7.6 billion outflow as Amazon accelerated purchases of property and equipment, primarily for AI infrastructure. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ - Amazon shares gained about 9% in after-hours trading as investors focused on AWS’s acceleration despite a third-quarter sales forecast below analysts’ expectations. 2 https://apnews.com/article/amazon-second-quarter-earnings-cloud-b4ce02b4666a35b8975823c5c22072ee 3 https://www.axios.com/2026/07/30/amazon-earnings-revenue-ai Amazon’s cloud business accelerated sharply in the second quarter, giving CEO Andy Jassy fresh evidence for his case that the company’s vast artificial-intelligence infrastructure program is responding to customer demand rather than speculative forecasts. Amazon Web Services generated $42.2 billion in quarterly sales, up 37% from a year earlier and above the roughly $40.5 billion Visible Alpha consensus published before the report. AWS operating income reached $16.6 billion, up from $10.2 billion, and supplied about 60% of Amazon’s total operating profit. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ 6 https://www.spglobal.com/market-intelligence/en/news-insights/research/2026/07/amazon-earnings-preview-q2-2026 Shares rose about 9% in after-hours trading Thursday. The initial reaction contrasted with the selloff that followed Amazon’s previous annual spending forecast, as investors looked past a cautious third-quarter sales outlook and continued pressure on free cash flow. 2 https://apnews.com/article/amazon-second-quarter-earnings-cloud-b4ce02b4666a35b8975823c5c22072ee 3 https://www.axios.com/2026/07/30/amazon-earnings-revenue-ai AWS acceleration changes the capex debate Amazon reported total second-quarter sales of $200.6 billion, up 20%, and operating income of $27.5 billion, a 43% increase. North American operating income rose to $9.1 billion, while the international business contributed $1.7 billion. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ Net income jumped to $62.6 billion, or $5.75 per diluted share, but the figure included $53.4 billion in non-operating pre-tax income, primarily from Amazon’s Anthropic investment. Operating income therefore gives a cleaner view of the quarter’s underlying business performance. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ Amazon said AWS’s AI business and its chips business had each surpassed a $25 billion annual revenue run rate, with both growing at triple-digit percentages. The company’s chips total includes its Graviton processors, Trainium AI accelerators and Nitro networking hardware. Jassy has argued that custom silicon can lower customer costs and improve AWS economics, though the revenue and growth figures are company-reported and not independently broken out. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ 5 https://www.aboutamazon.com/news/company-news/amazon-ceo-andy-jassy-2025-letter-to-shareholders The stronger AWS result arrived as Amazon raised expected 2026 cash capital expenditures to approximately $220 billion from about $200 billion. Jassy attributed the increase primarily to higher memory costs. The budget also covers robotics, semiconductors and the Amazon Leo satellite network, though Amazon says AI infrastructure is the main driver of the spending increase. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ 2 https://apnews.com/article/amazon-second-quarter-earnings-cloud-b4ce02b4666a35b8975823c5c22072ee Memory and power remain constraints Jassy told investors that Amazon would still lack enough capacity to satisfy all the demand it expects in 2026 and that the imbalance would probably continue through 2027. He described demand already visible for 2028 as “striking.” 2 https://apnews.com/article/amazon-second-quarter-earnings-cloud-b4ce02b4666a35b8975823c5c22072ee The capacity problem extends beyond acquiring accelerators. AI data centers require land, grid connections, power, cooling, memory and networking equipment. Amazon said in its April shareholder letter that AWS added 3.9 gigawatts of power capacity in 2025 and expects to double its total power capacity by the end of 2027, yet still has demand it cannot serve. 5 https://www.aboutamazon.com/news/company-news/amazon-ceo-andy-jassy-2025-letter-to-shareholders Amazon’s latest guidance also identifies resource and supply volatility, including for memory chips, as a factor that could materially affect results. The company did not disclose how much of the extra $20 billion in projected spending reflects higher component prices rather than additional computing capacity. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ Jassy’s defense of the cash cycle is that Amazon does not commit every infrastructure dollar at the same time. In his shareholder letter, he said AWS typically pays for land, power, buildings and equipment six to 24 months before billing customers, depending on the component. Data centers have useful lives exceeding 30 years, while chips, servers and networking gear generally last five to six years, according to Amazon. 5 https://www.aboutamazon.com/news/company-news/amazon-ceo-andy-jassy-2025-letter-to-shareholders That structure does not eliminate the near-term cash cost. Amazon’s trailing 12-month free cash flow fell from an $18.2 billion inflow a year earlier to a $7.6 billion outflow. The company attributed the reversal primarily to a $66.1 billion year-over-year increase in net purchases of property and equipment, mostly reflecting AI investments. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ A softer sales guide did not derail the rally For the third quarter, Amazon forecast revenue of $197 billion to $202 billion, representing growth of 9% to 12%. The top of the range was below the $203.9 billion analyst expectation reported by FactSet. Amazon noted that Prime Day occurred in the second quarter this year rather than the third; excluding that calendar shift, it said third-quarter growth would be nearly four percentage points higher. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ 2 https://apnews.com/article/amazon-second-quarter-earnings-cloud-b4ce02b4666a35b8975823c5c22072ee The company expects third-quarter operating income of $22.5 billion to $26.5 billion, compared with $17.4 billion a year earlier. The forecast also assumes an approximately 0.8-percentage-point drag from foreign exchange rates. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ The initial share-price reaction suggests investors gave more weight to AWS’s nine-percentage-point growth acceleration from the first quarter than to the sales outlook. The quarter strengthens Amazon’s case that demand is filling new infrastructure as it comes online, but it does not settle the return-on-investment question: free cash flow is negative, and the eventual payoff still depends on utilization, pricing and the durability of AI demand. 1 https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ 3 https://www.axios.com/2026/07/30/amazon-earnings-revenue-ai Companies mentioned Further sources 1 Amazon.com, “Amazon.com Announces Second Quarter Results,” July 30, 2026. ↗ https://ir.aboutamazon.com/news-release/news-release-details/2026/Amazon-com-Announces-Second-Quarter-Results/ 2 Associated Press, “Amazon to boost spending on AI and other technology by $20 b… ↗ https://apnews.com/article/amazon-second-quarter-earnings-cloud-b4ce02b4666a35b8975823c5c22072ee 3 Axios, “Amazon revenue soars as AI investments pay off,” July 30, 2026. ↗ https://www.axios.com/2026/07/30/amazon-earnings-revenue-ai 4 CNBC, “Amazon soars after CEO Andy Jassy makes the case for its massive AI inve… ↗ https://www.cnbc.com/2026/07/30/amazon-soars-after-ceo-makes-the-case-for-its-massive-ai-investment.html 5 Amazon, “CEO Andy Jassy’s 2025 Letter to Shareholders,” April 2026. ↗ https://www.aboutamazon.com/news/company-news/amazon-ceo-andy-jassy-2025-letter-to-shareholders 6 S&P Global Market Intelligence, “Amazon earnings preview: Q2 2026,” July 2026. ↗ https://www.spglobal.com/market-intelligence/en/news-insights/research/2026/07/amazon-earnings-preview-q2-2026 The stories that matter, in one email. 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