Key Takeaways

• Stock pops 2%: Amazon shares opened higher on the back of a blowout quarter that smashed analyst expectations.
• EPS crushes consensus: Earnings per share came in at $2.78, far above the $1.63 expected, with revenue hitting $181.5 billion versus the $177.13 billion forecast.
• AWS reignited: Cloud growth accelerated to 28% — the fastest pace in 15 quarters — signaling a major reacceleration for the division.
• Chip business milestone: Amazon’s proprietary silicon business crossed a $20 billion annual revenue run rate, growing triple digits year-on-year.
• Capex surge: Q1 property and equipment purchases jumped nearly 77% to $44.2 billion — exceeding analyst expectations on infrastructure spending.
• Free cash flow squeeze: Trailing twelve-month free cash flow dropped to just $1.2 billion, driven by a $59.3 billion year-on-year increase in capital spending.
• Record operating income: Q1 operating income hit $23.9 billion, with North America segment sales up 12% to $104.1 billion.
• Strong Q2 guidance: Revenue projected at $194-$199 billion, comfortably above the $189.15 billion consensus.
• Prime Day moves to June: The shift will pull retail demand forward, lifting Q2 results.
• Advertising over $70B: TTM advertising revenue surged past $70 billion, reinforcing its role as a key profit engine.

Amazon.com shares opened higher on Thursday, last up around 2% after the company unveiled record-breaking quarterly profits. The technology giant reported earnings per share of $2.78, smashing the analyst consensus of $1.63, while revenue of $181.5 billion also blew past the $177.13 billion Street estimate.

The headline of the release was a 28% growth rate at Amazon Web Services, signaling a dramatic re-acceleration for the cloud division. Chief Executive Andy Jassy underscored the momentum, 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).”

Capex Boom Squeezes Free Cash Flow

Investors appeared to be weighing record operating income of $23.9 billion against a sharp contraction in free cash flow. The metric tumbled to just $1.2 billion for the trailing twelve months — a decline that 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.”

In the first quarter alone, purchases of property and equipment soared to $44.2 billion. That figure represents a nearly 77% jump from the $25.0 billion spent in the same period a year ago, exceeding the expectations of analysts who had flagged caution over the pace of infrastructure expansion.

Evercore analyst Mark Mahaney described Wednesday’s report as “the strongest top-line and consolidated margin print in several quarters.”

Chip Push and Project Hail Mary Score Big

The company’s enormous investment in proprietary silicon reached a new milestone as its chip business exceeded a $20 billion annual revenue run rate.

Jassy highlighted a string of internal successes, saying, “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.”

Retail Engine Still Roaring

The core retail business remained a bright spot, with North America segment sales rising 12% to $104.1 billion. This growth allowed the division to expand its operating margin to 7.9%, even as the company absorbed a $1 billion headwind from its satellite-based internet project.

Robust Q2 Guidance and Prime Day Shift

Management provided second-quarter revenue guidance between $194 billion and $199 billion, comfortably above the $189.15 billion analyst consensus. The company expects operating income to range from $20 billion to $24 billion, indicating that the core business continues to generate enough cash to fund its $200 billion long-term investment cycle.

The second-quarter outlook was further bolstered by the official confirmation that Prime Day will move to June, pulling significant retail demand forward.

Emarketer principal analyst Sky Canaves observed, “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.”