Amazon.com, Inc. Q1 2026 10-Q Summary
Business Context and Reporting Period
This summary covers Amazon.com, Inc.'s (AMZN) unaudited quarterly results for the period ended March 31, 2026. The company operates three primary segments: North America, International, and Amazon Web Services (AWS). As of April 22, 2026, there were approximately 10.76 billion shares of common stock outstanding.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Net Sales | $181.5 billion | $155.7 billion |
| Operating Income | $23.9 billion | $18.4 billion |
| Net Income | $30.3 billion | $17.1 billion |
| Diluted EPS | $2.78 | $1.59 |
| Operating Cash Flow | $26.0 billion | $17.0 billion |
| Free Cash Flow (TTM) | $1.2 billion | $25.9 billion |
| Long-Term Debt | $119.1 billion | $65.6 billion |
| Cash & Equivalents | $101.8 billion | $86.8 billion |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 17% year-over-year, driven by 12% growth in North America, 19% in International, and 28% in AWS. Foreign exchange rates positively impacted sales by $2.9 billion.
- Profitability Surge: Net income nearly doubled to $30.3 billion. This was significantly boosted by a $15.6 billion gain in "Other income (expense), net," primarily due to a $12.3 billion upward valuation adjustment on nonvoting preferred stock in Anthropic and reclassification gains from convertible notes.
- Capital Expenditures: Cash capital expenditures rose sharply to $43.2 billion (from $24.3 billion in Q1 2025), reflecting heavy investment in technology infrastructure for AWS and fulfillment networks.
- Debt Issuance: Long-term debt increased by approximately $53.4 billion in the quarter following the issuance of $37.0 billion in U.S. dollar notes and €14.5 billion in Euro-denominated notes in March 2026.
- Segment Performance: AWS operating income grew to $14.2 billion (up from $11.5 billion), while North America operating income reached $8.3 billion.
Guidance, Outlook, and Risks
- Q2 2026 Guidance: Amazon expects Q2 net sales between $194.0 billion and $199.0 billion (16%–19% growth) and operating income between $20.0 billion and $24.0 billion. This assumes Prime Day occurs in Q2 and excludes impacts from new acquisitions or legal settlements.
- Strategic Investments: The company invested $15.0 billion in OpenAI Series C Preferred Stock and holds a commitment to purchase an additional $35.0 billion. A $100.0 billion expansion of the AWS commercial arrangement with OpenAI was also announced.
- Acquisitions: Amazon entered a definitive agreement to acquire Globalstar, Inc. for approximately $10.9 billion (cash and stock), expected to close in 2027.
- Risks: Key risks include intense competition in AI and cloud services, regulatory scrutiny (antitrust, data privacy, and labor), foreign exchange volatility, and the complexity of integrating new technologies and acquisitions. Tax contingencies remain at approximately $6.7 billion.
Investor Verification Checklist
- Non-GAAP vs. GAAP: Verify the sustainability of net income by isolating the $15.6 billion non-operating gain from Anthropic and OpenAI investments, which significantly inflated Q1 2026 earnings.
- Free Cash Flow: Note the sharp decline in trailing twelve-month free cash flow to $1.2 billion due to record capital expenditures; assess if this spending pace is sustainable or temporary.
- Debt Load: Review the impact of the $53.4 billion debt issuance on future interest expenses and liquidity, despite the company's strong cash position.
- OpenAI Commitment: Confirm the terms and drawdown conditions of the $35.0 billion equity commitment to OpenAI and the $20.0 billion financing facility for Anthropic.
- Globalstar Acquisition: Monitor regulatory approval progress and the potential dilution or cash outflow associated with the Globalstar merger.
