Shares of Amazon initially fell but are now 1.7% higher on earnings. (now 3.2% lower).
- Revenue of $181.5B vs $177.3B exp
- Q2 revenue guide of $194-199B vs $188.9B exp (but this does include Prime Day in Q2 this year)
Capex hit $44.2B, up 77% YoY. TTM capex stands at $147.3B, up 67% from $88.0B a year ago. Free cash flow collapsed to $1.2B on a TTM basis, down 95%. Amazon explicitly attributes this to AI investment. Operating cash flow grew 30% to $148.5B TTM — and essentially every incremental dollar is being redeployed into data centers.
The funding shift is the most important development in the quarter. Long-term debt jumped from $65.6B to $119.1B in three months — a $53.4B issuance versus $746M in Q1 2025. The most cash-generative company on earth just borrowed $53B in a quarter. Operating cash flow alone can no longer fund the cycle. This mirrors Alphabet’s recent $20B bond (including a 100-year tranche) and signals the hyperscaler complex is transitioning from self-funded to capital-markets-funded. That’s a regime change. Cash climbed to $101.8B — Amazon is building a war chest for what’s coming.
AWS revenue hit $37.6B, up 28% YoY — the fastest growth in 15 quarters. Operating margin expanded to 37.7% from 35.0% last quarter. Like Azure (39% CC) and Google Cloud (~50% expected), AWS is supply-constrained: 28% is a ceiling set by capacity, not demand. Margin expansion despite massive depreciation drag suggests revenue is still outrunning the depreciation curve — for now.
Custom silicon is now a real business. Graviton, Trainium, and Nitro hit a $20B annual run rate, growing triple digits. Amazon deployed 2.1 million+ AI chips over 12 months, more than half Trainium. Forward commitments are staggering: Anthropic signed for up to 5 GW of Trainium, OpenAI committed to 2 GW ramping in 2027. The OpenAI deal is particularly notable — Microsoft’s flagship AI partner is diversifying to Amazon. Trainium is now competitive at frontier-model scale.
Bedrock processed more tokens in Q1 than all prior years combined, with customer spend +170% QoQ. That’s exponential adoption and likely Amazon’s answer to Microsoft’s $37B AI run-rate disclosure.
Q2 guidance hints at margin pressure. Revenue guided $194–199B (+16–19%); operating income $20–24B. The midpoint implies only 15% operating income growth, well below Q1’s 30%. D&A was $18.9B, up 33% YoY — depreciation will accelerate as $44B+ in new quarterly capex enters service. The wide $4B operating income range suggests Amazon itself is uncertain about the depreciation curve.
No full-year capex or 2027 guide. Q1’s pace implies 2026 capex of $210–230B for Amazon alone, pushing the four-name hyperscaler total to $650–700B+. With 7 GW of contracted compute coming in 2027, Amazon’s 2027 capex could run $250–300B+ — larger than Australia’s entire federal budget.
