Amazon.com NASDAQ: AMZN executives highlighted accelerating growth in AWS, record operating margins, and continued heavy investment in AI infrastructure and satellites during the company’s first-quarter 2026 earnings call on April 29.
Quarterly results and profitability
CEO Andy Jassy said Amazon reported $181.5 billion in revenue, up 17% year-over-year. He added that excluding a $2.9 billion favorable foreign exchange impact, net sales increased 15%. Operating income was $23.9 billion.
CFO Brian Olsavsky said worldwide operating income of $23.9 billion translated to a 13.1% operating margin, which he called Amazon’s highest operating margin ever. Olsavsky also broke out segment performance:
- North America: $104.1 billion in revenue, up 12% year-over-year; operating income of $8.3 billion; operating margin of 7.9%.
- International: $39.8 billion in revenue, up 11% year-over-year excluding FX; operating income of $1.4 billion; operating margin of 3.6%.
- AWS: $37.6 billion in revenue, up 28% year-over-year; operating income of $14.2 billion.
AWS accelerates, driven by AI and core workloads
Jassy emphasized that AWS growth “continued to accelerate,” rising 28% year-over-year—the “fastest growth rate in 15 quarters.” He said AWS revenue increased by $2 billion quarter-over-quarter, which he described as the “largest Q4 to Q1 AWS revenue increase ever,” and pegged AWS at a $150 billion annualized revenue run rate.
Jassy said Amazon is seeing rapid adoption of AI and positioned AWS as a leader in the current cycle, noting that AWS’s AI revenue run rate is over $15 billion in the first three years of the current AI wave. He pointed to multiple AWS services and adoption metrics, including:
- Bedrock: Jassy said it saw 170% growth in customer spend quarter-over-quarter and processed more tokens in Q1 “than all prior years combined.” He said Bedrock is used by “over 125,000 customers” and that “almost 80% of the Fortune 100 companies are using Bedrock.”
- Amazon Q: Jassy said the number of developers using Amazon Q more than doubled quarter-over-quarter and enterprise customer usage increased nearly 10x. He also said Amazon announced “V1 of our Amazon Q desktop app yesterday.”
- AWS Transform: Jassy said customers have used it to save “over 1.56 million hours of manual effort” migrating and modernizing workloads.
Olsavsky said AWS growth was driven by “both core and AI services,” and added that Amazon continues to see cloud migrations increase while customers “scale their use of AWS core services.” He said the company sees a “strong correlation between AI spend and core growth,” and expects that link to strengthen as more AI workloads move into production. Olsavsky also said Amazon’s AI revenue is growing “triple digits year-over-year.”
Custom silicon, capacity investment, and backlog visibility
Jassy spent a significant portion of the call discussing Amazon’s chips strategy, calling the company’s custom silicon business “one of the top three data center chip businesses in the world,” based on Amazon’s assessment. He said the chips business saw nearly 40% quarter-over-quarter growth in Q1, with an annual revenue run rate “over $20 billion” and “growing triple-digit percentages year-over-year.” He added that if the chip business were standalone and sold chips produced this year to AWS and third parties, its annual revenue run rate would be $50 billion.
On Trainium, Jassy said Amazon has “over $225 billion in revenue commitments,” and described capacity as tight: Trainium2 is “largely sold out,” Trainium3 is “nearly fully subscribed,” and “much of Trainium4…has already been reserved.” He also said Trainium will “save us tens of billions of dollars of CapEx each year and provide several hundred basis points of operating margin advantage versus relying on others’ chips for inference.”
During Q&A, Jassy said the company could sell racks of Trainium over time, but that allocation decisions depend on balancing demand from existing customers versus external rack sales. “I expect over time there’s a good chance we’re gonna sell racks over the next couple years,” he said.
Jassy also reiterated Amazon’s continued partnership with NVIDIA, saying Amazon will “continue to order substantial quantities,” and that “we will always have customers who want to run NVIDIA on AWS.”
On investment levels, Jassy said AWS must invest ahead of demand because it typically lays out cash for land, power, buildings, and hardware “6 to 24 months before we start billing customers.” While he acknowledged that periods of high growth can pressure near-term free cash flow when capex growth outpaces revenue, he said the company has “high confidence” its 2026 AWS capex will be “monetized well,” with “customer commitments for a substantial portion of it,” yielding “compelling operating margins and ROIC.”
Olsavsky said cash capex was $43.2 billion in Q1, “primarily” related to AWS and generative AI investments.
In response to a question on AWS backlog, Jassy said the Q1 backlog was $364 billion and stated that figure does not include the recently announced deal with Anthropic “for over $100 billion.” He added that the backlog has “reasonable breadth” and is “not just one customer or two customers.”
Retail, grocery expansion, ads growth, and AI-driven experiences
In Amazon’s stores business, Jassy said units grew 15% year-over-year, the highest rate since the tail end of COVID lockdowns. He said Amazon added “more than 600 new notable brands,” and discussed grocery momentum, including that Amazon is now the “second-largest grocer in the U.S.” based on “more than $150 billion in gross sales in 2025.” He said the company offers perishables delivered same-day in more than 2,300 U.S. cities and towns.
Jassy said Whole Foods Market “continues to accelerate,” with “over 550 stores today and 100 more coming in the next few years.” He added that average prices on products offered on Amazon.com decreased versus the prior year period and that Prime Day will take place “in most countries in June.”
On delivery speed, Jassy said Amazon delivered “more than 1 billion items same day overnight so far this year,” and highlighted expanded 1-hour and 3-hour delivery options on over 90,000 items. He also discussed Amazon Now, its 30-minutes-or-less service, noting it started in India and that orders there are increasing 25% month-over-month.
Olsavsky said Amazon’s fulfillment network showed improving efficiency, with outbound shipping costs up 12% year-over-year and fulfillment expense up 9% year-over-year (both FX-neutral), while unit growth ran higher. He also said all U.S. large-format fulfillment center launches in 2026 will include Amazon’s latest generation robotics and automation technology, with early results showing “improved site safety, higher productivity, and lower cost to serve.”
Amazon’s advertising business posted $17.2 billion in Q1 revenue, up 22% year-over-year, according to Jassy. He cited partnerships including an expanded Netflix relationship through Amazon Audiences and a collaboration with Comcast Advertising to expand local advertising. Jassy also said Amazon expanded its Creative Agent tool to additional countries.
On AI-assisted shopping and “agentic commerce,” Jassy said Rufus monthly active users are up over 115% and engagement is up nearly 400% year-over-year. In Q&A, he argued that third-party “horizontal agents” are still early and often lack accurate pricing, product information, and personalization, while Amazon aims to make Rufus “the best shopping assistant anywhere.” Asked about advertising in an agentic world, Jassy said he believes advertising will “do well,” pointing to multi-turn agent conversations creating multiple opportunities to surface relevant products, including sponsored prompts.
Amazon Leo, Globalstar, and Q2 guidance
Jassy said Amazon Leo’s commercial service is “on track to launch in a few months,” and that the company already has “meaningful revenue commitments” from enterprises and governments, listing customers including Delta Air Lines, JetBlue, AT&T, Vodafone, DirecTV Latin America, Australia’s National Broadband Network, DP World Tour, and NASA. He also said Amazon plans to acquire Globalstar to expand Leo’s network with direct-to-device capabilities and has an agreement with Apple for Leo to power satellite services for iPhones and Apple Watches.
During Q&A, Jassy said Leo had “over 250 satellites in space,” described planned launch cadence, and said performance would be “about two times better on the downlink” and “about six times better on the uplink” than existing alternatives, in his view. He said the key constraint on growth is getting the constellation into space, with “over 20 launches planned this year” and “over 30 launches planned in 2027.”
Olsavsky said Q2 guidance assumes Prime Day occurs in Q2 in most large geographies, while occurring in Q3 in Australia, Brazil, India, and Japan. He guided to:
- Q2 net sales: $194 billion to $199 billion
- Q2 operating income: $20 billion to $24 billion
Olsavsky said Q2 guidance includes a seasonal step-up in stock-based compensation, higher transportation costs related to fuel inflation (partially offset by a fuel and logistics-related FBA surcharge), and a year-over-year cost increase of approximately $1 billion in North America related to Amazon Leo as the company manufactures and launches more satellites. He also said Amazon expects Leo’s commercial service to launch in Q3 and expects to begin capitalizing certain costs in Q4, including production and launch costs.
About Amazon.com NASDAQ: AMZN
Amazon.com, Inc is a diversified technology and retail company best known for its e-commerce marketplace and broad portfolio of consumer and enterprise services. Founded by Jeff Bezos in 1994 and headquartered in Seattle, Washington, the company launched as an online bookseller and expanded into a global retail platform that sells products directly to consumers and provides a marketplace for third-party sellers. Over time Amazon has grown beyond retail into areas including cloud computing, digital media, devices and logistics.
Key businesses and offerings include Amazon's online marketplace and fulfillment services, the Amazon Prime membership program (which bundles expedited shipping with streaming and other benefits), Amazon Web Services (AWS) which supplies on-demand cloud computing and storage to businesses and public-sector customers, and a range of content and advertising services such as Prime Video and Amazon Advertising.
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