We are now in the busiest week of the Q2 2026 earnings season. While almost a third of S&P 500 Index ($SPX) companies are set to report their earnings this week, the confessionals of Magnificent 7 stocks would attract outsized attention. Specifically, Amazon (AMZN) is set to report its Q2 earnings after markets close on July 30. AMZN stock is nearly flat for the year heading into the report. It had hit its record highs in early May, days after its Q1 earnings, and has since lost over 16% from those levels. In my previous article, I noted that while AMZN wasn’t a screaming buy, it can be nibbled at. The stock has come off slightly from those levels after last week’s selloff, driven by Q2 earnings from Alphabet (GOOG) (GOOGL) and Tesla (TSLA), both of which raised their 2026 capex budgets. Let's explore whether AMZN is a buy or a sell ahead of its Q2 earnings.
www.barchart.comAWS Growth Is Expected to Rise Sequentially
Incidentally, Amazon had the highest capex budget for the year at $200 billion, even though in relative terms (as a percentage of expected 2026 revenues), Meta Platforms (META) is spending the most among hyperscalers. Alphabet, meanwhile, raised its 2026 capex budget during the Q2 call and now expects to spend up to $205 billion. Along with the bumped-up capex, which wasn’t surprising given the inflationary pressures, what grabbed attention was the 82% year-over-year (YoY) rise in the company’s cloud revenues.
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That number was nearly 20 percentage points higher than Street estimates and has raised the bar for AMZN, whose Amazon Web Services (AWS) is the market leader in the cloud market. However, it has been losing market share as both Microsoft (MSFT) and Alphabet, the two biggest players after Amazon, have been growing at a much faster pace.
In Q1, AWS revenues rose 28% YoY, with the growth rate expanding to a multi-quarter high. Amazon does not provide specific guidance for AWS, but Bank of America expects the segment’s revenues to rise 33% YoY. While the percentage growth is much lower than Alphabet's, it comes from a very high base, as AWS is now a $150 billion annualized revenue run-rate business.
Amazon Q2 Earnings Estimates
Bank of America expects Amazon to post total revenues of $198.8 billion in the quarter, which is slightly ahead of Street estimates and towards the upper end of the company’s guidance. Consensus estimates call for Amazon’s Q2 earnings per share (EPS) to land at $1.81, 7.7% higher than the corresponding quarter last year. Like fellow hyperscalers, growing AI capex is taking a toll on Amazon’s earnings, with analysts modeling only an 8% increase in 2026 EPS.
www.barchart.comAMZN Stock Forecast
There hasn’t been much analyst action heading into Amazon’s Q2 earnings, and there have just been a couple of cursory target price adjustments. The overall sentiment remains bullish, though, and Amazon has a consensus rating of “Strong Buy” from the 57 analysts polled by Barchart. Its mean target price sits at $315.25, which is over 35% higher than current levels.
Should You Buy Amazon Stock Before Q2 Earnings?
I believe markets have factored in some capex increase from Amazon amid last week’s meltdown. Unless we see a big jump in that $200 billion number, AMZN’s post-earnings price action would largely depend on AWS growth and commentary on the chip business.
In terms of valuation, Amazon trades at a forward price-to-earnings (P/E) multiple of 30.15x, which is higher than both Alphabet and Microsoft. Among its Magnificent 7 peers, only Apple (AAPL) and Tesla trade at a higher multiple.
We can leave aside Tesla, as the valuation of Elon Musk-run companies might not be a benchmark given the “Musk premium.” As for Apple, its forward P/E has largely fluctuated in the 30s, and while the valuations of other Mag 7 stocks have contracted, Apple’s multiples have expanded this year after the stock’s rally in the “anti-AI” trade.
All said, while I remain bullish on Amazon and hold shares for the long term, I wouldn’t buy the stock heading into the Q2 report even though I expect a beat on strong cloud growth. That said, I won't sell the stock either, as much of the pessimism already seems baked into AMZN stock.
On the date of publication, Mohit Oberoi had a position in: AMZN , TSLA , GOOG , MSFT , META . 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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