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The earnings call reveals robust financial performance, especially in AWS and advertising, with strong revenue growth and high operating margins. AWS's expansion and AI investments are promising, supported by a significant backlog. The Q&A section highlights management's confidence in long-term returns and strategic AI partnerships. Despite some lack of specific guidance, the overall sentiment is positive due to record revenue, optimistic guidance, and strategic investments, suggesting a strong positive stock price reaction.
Revenue $213.4 billion, up 12% year-over-year, excluding the impact from foreign exchange rates. Growth attributed to strong demand across various segments, including AWS and retail.
Operating Income $25 billion, includes three special charges totaling $2.4 billion. Year-over-year comparison not explicitly stated, but charges include tax disputes, severance costs, and asset impairments.
AWS Revenue $35.6 billion, growth accelerated to 24% year-over-year. Driven by both core and AI services, with AWS now at a $142 billion annualized revenue run rate.
Advertising Revenue $21.3 billion, up 22% year-over-year. Growth driven by AI-powered ad tools and increased adoption of Prime Video ads.
Free Cash Flow $11.2 billion, trailing 12-month figure. No explicit year-over-year comparison provided.
North America Segment Revenue $127.1 billion, up 10% year-over-year. Growth attributed to sharp pricing, vast selection, and record delivery speeds.
International Segment Revenue $50.7 billion, up 11% year-over-year, excluding foreign exchange impact. Growth attributed to investments in faster delivery and competitive pricing.
AWS Custom Silicon (Graviton) Graviton is a multibillion-dollar annualized run rate business, growing more than 50% year-over-year. Growth driven by its price performance advantage and adoption by over 90% of AWS' top 1,000 customers.
Amazon Ads Growth Generated $12 billion of incremental revenue in 2025, with a 22% year-over-year growth rate. Growth attributed to AI-driven ad tools and expanded ad offerings.
Prime Video Ad-Supported Audience 315 million viewers globally, up from 200 million in early 2024. Growth attributed to expanded availability and increased adoption.
AWS Growth: AWS growth accelerated to 24%, the fastest in 13 quarters, with a $142 billion annualized run rate. The chips business, including Graviton and Trainium, reached over $10 billion in annual revenue, growing triple-digit percentages year-over-year.
AI and Agentic Capabilities: Amazon launched Nova Forge for custom AI models and Bedrock AgentCore for deploying AI agents. Bedrock is now a multibillion-dollar annualized run rate business, with customer spend growing 60% quarter-over-quarter.
Amazon Leo: Amazon Leo satellite internet service is set to launch commercially in 2026, with 180 satellites already launched and over 20 launches planned for 2026. Agreements with AT&T, JetBlue, and others are in place.
Grocery Expansion: Amazon plans to open over 100 new Whole Foods Market stores and expand same-day delivery for perishables to more communities in 2026.
International Expansion: Amazon Now, an ultrafast delivery service, was launched in India, Mexico, and the UAE, with plans to expand further.
Delivery Speeds: Achieved record-fast delivery speeds for Prime members, with nearly 70% more items delivered same day in the U.S. year-over-year.
Fulfillment Network: Regionalized network in the U.S. improved local inventory placement, leading to faster delivery at lower costs.
AI Investments: Investing heavily in AI capabilities, including custom silicon and AI agents, to maintain leadership in cloud and AI services.
Price Competitiveness: Amazon remains the lowest-priced retailer in the U.S. for the ninth consecutive year, 14% lower on average than competitors.
Fluctuations in foreign exchange rates and energy prices: The company's results are inherently unpredictable and may be materially affected by fluctuations in foreign exchange rates and energy prices.
Global economic and geopolitical conditions: Changes in global economic and geopolitical conditions, including recessionary fears, inflation, and interest rates, could materially impact the company's financial results.
Tariff and trade policies: Tariff and trade policies pose a risk to the company's operations and financial performance.
Resource and supply volatility: Volatility in resources and supply, including for memory chips, could disrupt operations and impact financial outcomes.
Customer demand and spending: Recessionary fears and inflation could negatively affect customer demand and spending, impacting revenue.
Regional labor market constraints: Constraints in regional labor markets could affect operational efficiency and costs.
AWS capacity and demand management: High demand for AWS services requires significant investment in capacity, and there is a risk of over- or underestimating demand signals, which could impact returns on invested capital.
Cost of AI inference and chips: The high cost of AI inference and chips is a significant impediment to broader AI adoption, which could limit growth in this area.
Regulatory and legal challenges: The company faces regulatory and legal challenges, including tax disputes and lawsuits, which have already resulted in special charges.
Asset impairments: Asset impairments, particularly related to physical stores, have negatively impacted operating income.
Competition in pricing and delivery: Aggressive pricing strategies and investments in faster delivery options to compete with rivals could pressure margins.
Amazon Leo investment costs: Significant investment in Amazon Leo satellite services, with costs currently expensed as incurred, could impact short-term profitability.
AWS Growth and Investments: AWS growth accelerated to 24% year-over-year, reaching a $142 billion annualized revenue run rate. The company plans to invest heavily in AWS, including $200 billion in capital expenditures, predominantly for AWS, to meet high demand for core and AI workloads. AWS is expected to monetize capacity as fast as it can be installed.
AI and Custom Silicon: Amazon is focusing on AI advancements, including the launch of Nova Forge for customized AI models and Trainium chips for cost-effective AI inference. Trainium3 chips are expected to be fully committed by mid-2026, and Trainium4 is under development. AI agents and services like Bedrock AgentCore and Frontier Agents are expected to drive future growth.
Amazon Leo Satellite Service: Amazon plans to commercially launch its Leo satellite service in 2026, with over 20 launches planned for 2026 and more than 30 in 2027. The service aims to provide enterprise-grade connectivity and has already signed agreements with major companies like AT&T and JetBlue.
Grocery and Same-Day Delivery Expansion: Amazon plans to expand its same-day delivery service to more communities in 2026 and open over 100 new Whole Foods Market stores in the coming years. The company is also focusing on enhancing its grocery offerings, which have shown strong customer adoption.
Advertising Growth: Amazon Ads revenue grew 22% year-over-year, with innovations like AI-driven ad agents expected to further enhance growth. Prime Video ads and other advertising services are contributing meaningfully to revenue.
Q1 2026 Financial Guidance: Net sales are expected to be between $173.5 billion and $178.5 billion, with operating income projected between $16.5 billion and $21.5 billion. Investments in Amazon Leo and international stores are expected to impact costs.
The selected topic was not discussed during the call.
The earnings call reveals robust financial performance, especially in AWS and advertising, with strong revenue growth and high operating margins. AWS's expansion and AI investments are promising, supported by a significant backlog. The Q&A section highlights management's confidence in long-term returns and strategic AI partnerships. Despite some lack of specific guidance, the overall sentiment is positive due to record revenue, optimistic guidance, and strategic investments, suggesting a strong positive stock price reaction.
The earnings call reflects strong performance in AWS, advertising growth, and strategic investments in AI and robotics. Despite high CapEx, Amazon's initiatives like Trainium and Project Rainier are well-received, showing potential for future growth. The Q&A section highlights high demand for Trainium and strategic grocery expansion, though some uncertainties remain. Overall, positive financial metrics, optimistic guidance, and strategic partnerships suggest a positive stock movement.
Amazon's earnings call reflects strong financial performance, with significant revenue and operating income growth. The Q&A reveals potential risks, like tariffs and AWS supply constraints, but also highlights Amazon's strategic investments in AI and new products like Alexa+ and Project Kuiper. Despite some uncertainties, the optimistic guidance for Q3 and positive developments in international segments suggest a favorable outlook. The lack of detailed guidance on tariffs and AWS constraints is a concern, but overall, the sentiment is positive, expecting a stock price increase of 2% to 8%.
The earnings call reveals strong financial performance with a 10% increase in revenue and a 20% rise in operating income. AWS and advertising revenues show robust growth, and AI investments indicate future potential. However, the lack of a share buyback program and regulatory risks slightly dampen the outlook. Overall, the positive guidance and strategic initiatives suggest a stock price increase of 2% to 8% over the next two weeks.
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