Amazon AWS Revenue Jumps 37% as Free Cash Flow Turns Negative

EarningsProduct / Tech Impact 4
โดย Zacks Investment Research·US·Read original
Summary · why it matters

Amazon's AWS posted its fastest growth in 18 quarters in the second quarter of 2026, with revenues jumping 37% year over year to $42.2 billion and segment operating income surging 64% as margin expanded to 39.4% from 32.9%. Within that total, AWS' AI-services business has surpassed a $25 billion annualized revenue run rate and its custom-chip business, comprising Trainium and Graviton, has also crossed a $25 billion run-rate threshold, both growing at triple-digit percentage rates, while AWS as a whole now operates at a $169 billion annualized revenue rate. Despite that growth, trailing-12-month free cash flow swung to an outflow of $7.6 billion from an inflow of $18.2 billion a year earlier, driven by a $66.1 billion year-over-year increase in net property and equipment purchases tied to AI infrastructure investment. Second-quarter capex alone hit $54.2 billion, up from $32.2 billion a year earlier, and management has guided roughly $220 billion in cash capex for 2026, with long-term debt at $128.9 billion, essentially double the $65.6 billion carried two quarters earlier. Amazon's trailing-12-month ROIC stands at 12.4%, above its own 10-year median of 11.5%, and management says server and networking investments typically break even in under three years while much of the current AI capacity is already contracted for five years or more.

Impact on stocks 3

Artificial Intelligence▲ · 3 stocks
Amazon.com Inc
AMZN
▲ PositiveCapitalDemandrelevance

AWS revenue jumped 37% to $42.2B with operating income up 64% and margin expanding to 39.4%, though trailing FCF swung to a $7.6B outflow on $54.2B quarterly capex.

Theme Impact 9

Related news

▲2impact 4

Cramer Says Broadcom Has More Orders Than Almost Anyone But NVIDIA

Jim Cramer said Broadcom CEO Hock Tan told him demand for AI compute infrastructure remains extremely strong and durable, with the custom chip designer holding more orders than almost anybody other than Jensen Huang. Cramer's remarks on CNBC center on whether Broadcom can keep capturing custom AI chip orders, and the third quarter earnings released on September 2nd support the growth narrative, with revenue up 86%, AI semiconductor revenue up 221%, and fiscal year 2026 guidance implying 186% annual AI revenue growth. Tan reaffirmed that Broadcom could pull in $115 billion in annual AI chip sales in 2027 and $230 billion in 2028. Still, the fiscal fourth quarter guide left investors wanting more, with $34.8 billion in revenue missing analyst estimates of $35.03 billion and gross margin guided at 73%, a five point annual drop due to a higher mix of XPU sales. Estimates suggest 71% of Broadcom's fiscal 2027 and 2028 XPU deployment could rely on OpenAI and Anthropic, meaning a huge portion of orders might come from firms now calling for a slowdown in AI development. In Q2, 170 out of the 1,006 funds tracked by Insider Monkey held a stake in Broadcom, a slight drop from 163 out of 1,022 funds in Q1, with notable exits including Third Point and Two Sigma Advisors, and the stock trades at a forward P/E ratio of 18 versus NVIDIA's 23.42.
AVGONVDA
Artificial Intelligence ▲Semiconductors ▲
Insider Monkey·6hRead more →
▲

Nvidia Commits $6.5 Billion to Photonics as AI Optical Market Eyes Ninefold Growth

Nvidia has committed at least $6.5 billion to photonics companies over the three months prior to May 2026, including $500 million to Corning for advanced optical connectivity solutions and $2 billion each to Lumentum, Coherent and Marvell, according to CNBC. The impact has been significant, with Marvell shares gaining 183.4% year to date, while Lumentum, Corning and Coherent have advanced 142.5%, 68.8% and 60.3%, respectively. Goldman Sachs projects the total addressable market for optical networking to grow from roughly $15 billion in 2026 to about $154 billion by 2028, a more than ninefold increase. Adoption of co-packaged optics is expected to accelerate starting in 2027, reaching roughly 20% to 30% penetration by 2028, while Mordor Intelligence estimates the global photonics market will reach $1.46 trillion by the end of 2026. Investors seeking diversified exposure can consider the Roundhill Photonics & Optics ETF LYTE, with $254.2 million in assets under management across 19 holdings; the KraneShares Photonic and Optical ETF LUMA, with $9.76 million in net assets; and the Tema Photonics & Optical ETF LAZR, with $94 million in net assets across 27 companies.
AMDCOHRGLWGSLITEMRVL+1
Artificial Intelligence ▲Semiconductors ▲
Zacks Investment Research·10hRead more →

Jim Cramer Calls Selling Arm Holdings Early a "Big Mistake" as Stock Sits 46% Below June High

Jim Cramer said selling Arm Holdings early was a "big mistake," noting on the September 16 episode of Mad Money that the stock has fallen 46% from its June high of $452 to just under $244. Arm's fiscal first quarter 2027 results showed total revenue of $1.29 billion, up 22% year over year, with royalty revenue up 22% to $715 million and licensing revenue up 23% to $574 million, while data-center royalties more than doubled and the company posted a non-GAAP operating margin of 41% and $665 million in non-GAAP free cash flow. Management expects Q2 FY27 revenue of $1.38 billion with a $50 million margin of error, non-GAAP operating expenses of about $780 million, and non-GAAP fully diluted earnings per share of $0.47 with a $0.04 margin of error, with results due by November 4. The stock trades at around 110x forward earnings, and short interest stood at 11.52% of the public float as of August 31, while 52 hedge fund portfolios held a stake in the second quarter, up from 46 in the prior period. Cramer argued that panicking over steep pullbacks in dominant tech leaders is a losing game, calling short-term drops buying opportunities for patient investors given Arm's royalty growth and tight supply.
ARM
Semiconductors ▲Artificial Intelligence
Insider Monkey·13hRead more →
© 2026 MarketDXNews