Amazon (AMZN) will release its second-quarter earnings on July 30, and another quarter of solid growth appears likely. Strong momentum across its e-commerce, advertising, and cloud businesses should help the tech giant deliver solid financial results. Yet even a better-than-expected quarter may not be enough to lift AMZN stock.
Amazon shares have fallen more than 11% over the past three months and remain largely flat for the year, underperforming the broader market. The muted stock performance reflects a growing concern about Amazon's massive spending on cloud and AI infrastructure.
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The company plans to invest roughly $200 billion through 2026, with most of that capital earmarked for expanding Amazon Web Services (AWS), its cloud business, and expanding its artificial intelligence (AI) capabilities. Notably, Amazon spent $43.2 billion on capital expenditures in Q1 2026.
While these investments are likely to cement Amazon's leadership in cloud computing and AI, investors are increasingly questioning when they will begin generating meaningful returns. Until there is clearer evidence that AI spending is translating into higher profits and stronger free cash flow, even an impressive Q2 earnings report may struggle to provide a sustained boost to AMZN stock.
www.barchart.com Strength Across Businesses to Drive Amazon’s Q2
Amazon is expected to report a strong Q2, supported by accelerating growth across its cloud, AI, advertising, and e-commerce businesses.
The biggest growth driver remains AWS. In Q1, AWS generated $37.6 billion in revenue, up 28% year-over-year (YOY), marking acceleration from the previous quarter. The strong performance reflects robust demand for both traditional cloud infrastructure and AI workloads.
Within AWS, AI-related revenue is already growing at a triple-digit rate, underscoring the rapid adoption of Amazon's expanding AI platform. The cloud business also ended the quarter with a record contracted backlog of $364 billion, providing strong revenue visibility. This number is expected to expand further, supporting multiyear growth.
Another fast-growing opportunity is Amazon's custom AI chip business. Revenue from its AI silicon division jumped nearly 40% sequentially and is now running at an annualized pace exceeding $20 billion. Demand for Amazon's Trainium chips remains exceptionally strong, with major customers like OpenAI and Anthropic committing to long-term deployments. Current-generation chips are largely sold out, while future platforms are already attracting reservations well ahead of launch, highlighting Amazon's growing competitiveness in AI infrastructure.
The advertising business also continues to deliver impressive growth. Advertising revenue increased 22% YOY to $17.2 billion in Q1, making it one of the company's fastest-growing and highest-margin businesses.
Meanwhile, Amazon's core e-commerce business is expected to remain resilient. Continued improvements in fulfillment efficiency, faster delivery speeds, and initiatives to lower its cost to serve should help support profitability even as the company maintains elevated investments in AI infrastructure and data centers.
For Q2, Amazon guided net sales of $194 billion to $199 billion, representing solid YOY growth from the $167.7 billion reported in the year-ago period. Wall Street expects the company to deliver earnings of $1.82 per share, up approximately 8% from a year earlier.
While heavy AI-related investments could continue to pressure margins in the near term, Amazon's improving operating efficiency and the strength of its higher-margin businesses, including AWS and advertising, should help offset part of that impact.
Final Takeaway
Amazon's Q2 results will likely reflect robust growth across AWS, AI, advertising, and its core retail business. However, investors are likely to look beyond headline revenue and earnings, focusing more on Amazon’s rising capital expenditures.
While these investments are strengthening the company's long-term growth prospects, they are also weighing on free cash flow and raising expectations for monetization. Elevated capex could continue to limit the recovery in AMZN stock.
Despite these concerns, Wall Street remains optimistic about Amazon's long-term outlook. Backed by multiple high-growth businesses and significant AI-driven opportunities, analysts continue to assign AMZN stock a “Strong Buy” consensus rating heading into the Q2 earnings report.
www.barchart.com On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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