Amazon.com (NASDAQ:AMZN) shares fell 2.6% in after-hours trading Wednesday, even as the company delivered record profits, with investor sentiment weighed down by a sharp increase in infrastructure investment. The tech giant posted earnings per share of $2.78, far exceeding the $1.63 consensus estimate, while revenue reached $181.5 billion, ahead of the $177.13 billion expected by analysts.
A key highlight from the report was Amazon Web Services, which posted 28% growth, marking a notable acceleration in its cloud business. Chief Executive Andy Jassy emphasized the strength across divisions, stating, “AWS is growing 28% (our fastest growth in 15 quarters) on a very large base, our chips business topped a $20 billion revenue run rate (growing triple digits year-over-year), Advertising grew to over $70 billion in TTM revenue, and unit growth in our Stores reached 15% (the highest since the tail end of covid lockdowns).”
Despite reporting record operating income of $23.9 billion, investors focused on declining free cash flow, which dropped to $1.2 billion over the trailing twelve months. The company attributed this decline to increased capital expenditures, noting it was “driven primarily by a year-over-year increase of $59.3 billion in purchases of property and equipment, net of proceeds from sales and incentives.”
Capital spending surged significantly in the first quarter alone, with property and equipment purchases rising to $44.2 billion — a nearly 77% jump compared to $25.0 billion in the same period last year. This pace of spending outstripped expectations, as analysts had previously cautioned about the rapid scale of Amazon’s infrastructure expansion.
Evercore analyst Mark Mahaney highlighted the company’s aggressive investment trajectory, saying, “On capex, commentary reinforces the FY26 $200B framework laid out at Q4, supporting AI workload demand including a new 2 GW OpenAI Trainium commitment ramping in 2027 and up to 5 GW with Anthropic.” He nevertheless praised the overall results, describing the report as “the strongest top-line and consolidated margin print in several quarters.”
Amazon’s push into proprietary chips also hit a milestone, with its silicon business surpassing a $20 billion annual revenue run rate. Jassy pointed to additional achievements, noting, “We also hit exciting milestones with delivery speed (more than 1 billion items same-day or overnight in 2026 and counting), Project Hail Mary (nearly $615 million at the box office to date and the second most successful non-sequel, non-franchise opening of recent memory), and Amazon Leo continues to resonate with prospective customers, with Delta Airlines the latest to sign on.”
The company’s core retail operations remained resilient, with North America segment sales climbing 12% to $104.1 billion. This helped lift operating margins in the segment to 7.9%, even as Amazon absorbed a $1 billion headwind tied to its satellite internet initiative.
Looking ahead, Amazon guided for second-quarter revenue between $194 billion and $199 billion, comfortably above the $189.15 billion consensus estimate. Operating income is projected to come in between $20 billion and $24 billion, underscoring management’s confidence in funding its long-term $200 billion investment strategy.
The outlook also reflects a shift in timing for its major sales event, with confirmation that Prime Day will move to June, bringing forward demand into the second quarter. Emarketer analyst Sky Canaves noted, “A June Prime Day will provide a major lift to Q2 revenues but one that will be counterbalanced by relatively weaker Q3 growth this year, though Amazon Ads should come out ahead and will remain a key profit engine for the company.”
Jassy framed the company’s spending as essential to capturing long-term opportunities, telling shareholders, “We’re in the middle of some of the biggest inflections of our lifetime, we’re well positioned to lead, and I’m very optimistic about what’s ahead for our customers and Amazon.”
While the stock reaction was muted, reflecting some investor caution around rising capital intensity, Amazon maintained that its investments are fueling growth. Management added, “We’re making customers’ lives easier and better every day across all our businesses, and their response is driving significant growth.”
More about Amazon
Amazon.com is a global technology and e-commerce company with leading positions in online retail, cloud computing through AWS, digital advertising, and logistics. The company is also investing heavily in artificial intelligence infrastructure and proprietary chips to support next-generation workloads, while continuing to expand its consumer ecosystem and enterprise services.