Amazon Q2 Earnings Due Today: AWS Growth and Capital Expenditure in Focus
Miles Bennett
Amazon reports Q2 results today. Wall Street expects AWS revenue up 31% year-on-year and total revenue near $197 billion, but the real swing factor is whether the company lifts its already massive $200 billion capex guide.
What is Wall Street expecting?
Consensus calls for total revenue of roughly $197 billion, up 17% year-on-year, and EPS of $1.82 versus $1.68 a year ago.
AWS alone is forecast to top $40 billion in quarterly revenue, up 31%, with an operating margin of about 34% — one percentage point above the year-ago quarter.
This means → expectations are already elevated. Any miss against these numbers could trigger a sell-off.
$200 billion in capex — where is the money coming from?
Amazon's 2026 capex guide stands at $200 billion, directed mainly at AI data centers. This means → spending already exceeds operating cash flow; the gap is filled by borrowing.
In Q1 the company added $53 billion in long-term debt. It has since issued roughly $39 billion in bonds across three currencies and arranged a $17.5 billion delayed-draw loan facility in June — still undrawn.
In plain terms = Amazon is running a "borrow now, earn later" bet on AI infrastructure. Interest expense is only about 0.4% of revenue for now, but debt is scaling fast — long-term lease liabilities already sit at $91 billion.
The Alphabet precedent — what happens if Amazon raises the bar too?
Last week Alphabet lifted its 2026 capex guide to roughly $200 billion. Its stock fell 7% the next day.
This reflects a very real market anxiety: when will massive AI spending start paying off?
This means → if Amazon similarly raises its guide, near-term share-price pressure is almost certain. Holding the line, paradoxically, could be read as a positive.
AWS demand outstrips supply — what do two price hikes tell us?
Amazon has raised AI server rental prices twice this year; the most recent hike was about a month ago.
This means → demand for AI cloud compute is still growing faster than Amazon can add capacity. Pricing power sits with the seller.
In 2025 rising depreciation charges weighed on AWS margins. That pressure is easing in 2026, and margins are partly recovering. Put simply = last year's heavy spending depressed reported profit; this year the amortisation pace is slowing, so the numbers look better.
Retail and advertising — is the business that drives 80% of revenue holding up?
Retail (online, physical stores, and third-party sellers combined) is forecast at roughly $122 billion, up 13% year-on-year.
One caveat: Amazon moved Prime Day from its usual Q3 slot to June to avoid the World Cup window. This means → Q2 retail figures get a one-off lift, but Q3 will face a corresponding drag — year-on-year comparisons need adjusting.
Advertising is expected at about $19 billion, subscriptions at roughly $14 billion. AWS accounts for only about 21% of total revenue but contributes roughly 58% of operating profit.
Anthropic stake revaluation — is there a paper gain hiding inside EPS?
Amazon has invested a cumulative $13 billion in Anthropic. Anthropic's valuation rose from $350 billion in February to $900 billion in a May funding round.
This means → part of this unrealised gain will flow through Q2 non-operating income, giving EPS a boost.
In plain terms = this profit did not come from Amazon's core operations — it is a mark-to-market "paper gain." Strip it out when assessing how the actual business performed.
Content is for reference only, not financial advice.