Amazon.com Q4 Earnings Call Highlights

Key Points

• AWS momentum: AWS growth accelerated to 24% with revenue of $35.6B, operating income of $12.5B and a $244B backlog (up 40% YoY), driven by strong AI/cloud demand and constrained supply; Amazon is scaling its custom chips (Graviton and Trainium) to boost price-performance.
• Massive capex for cloud/AI: Amazon plans about $200 billion in capital expenditures “predominantly in AWS,” expecting to monetize capacity quickly while acknowledging margins may fluctuate as depreciation and AI investments ramp.
• Retail, grocery and ads gain: North America revenue was $127.1B with faster same‑day delivery and grocery expansion (over 150M grocery customers), while advertising grew to $21.3B (up 22%) and features like Rufus and Prime Video ads meaningfully boosted engagement and monetization.

Amazon.com NASDAQ: AMZN executives highlighted accelerating AWS growth, expanding retail and advertising momentum, and heavy capital investment plans during the company’s fourth-quarter 2025 earnings call on February 5, 2026. Management reported $213.4 billion in quarterly revenue and pointed to demand trends in AI and cloud infrastructure as key drivers of both recent performance and expected spending in 2026.

Q4 results and special charges

CEO Andy Jassy said Amazon delivered $213.4 billion in revenue, up 12% year-over-year excluding foreign exchange. He added that operating income was $25 billion and trailing twelve-month free cash flow was $11.2 billion.

CFO Brian Olsavsky noted fourth-quarter operating income included $2.4 billion of special charges:

• $1.1 billion related to the resolution of tax disputes tied to the Stores business in Italy and the settlement of a lawsuit (primarily impacting the International segment).
• $730 million for estimated severance costs (impacting all three segments).
• $610 million for asset impairments, primarily related to physical stores (primarily impacting North America).

AWS: acceleration, AI stack, chips, and capacity constraints

Jassy said AWS growth accelerated to 24%, the fastest pace in 13 quarters, with AWS revenue up $2.6 billion quarter-over-quarter and nearly $7 billion year-over-year. Olsavsky reported AWS revenue of $35.6 billion and AWS operating income of $12.5 billion, while emphasizing that AWS operating margins can fluctuate depending on investment levels.

Management repeatedly returned to AI demand and Amazon’s “top-to-bottom AI stack” as reasons AWS is winning workloads. Jassy cited new AWS agreements announced since the prior call, including with OpenAI, Visa, NBA, BlackRock, Perplexity, Lyft, United Airlines, DoorDash, Salesforce, U.S. Air Force, Adobe, Thomson Reuters, AT&T, S&P Global, and others.

On infrastructure, Jassy said AWS is adding significant EC2 capacity daily and that much of the new compute is based on Amazon’s custom CPU silicon, Graviton, which he said is up to 40% more price-performant than leading x86 processors. He added that Graviton is used by over 90% of AWS’s top 1,000 customers and is a multi-billion-dollar annualized run rate business growing more than 50% year-over-year.

Jassy also stressed momentum in Amazon’s AI chip line, Trainium. He said Amazon has deployed more than 1.4 million Trainium2 chips and described Trainium2 as 30%–40% more price performant than comparable GPUs. He added that Amazon recently launched Trainium3, which he said is up to 40% more price performant than Trainium2, and expects nearly all Trainium3 supply to be committed by mid-2026. In response to a question about Anthropic’s “Project Rainier,” Jassy said the effort—Anthropic training its next model on Trainium2—had gone well, and reiterated that the initially discussed 500,000 chips for that project would continue to increase.

Beyond chips, Jassy outlined multiple AI services and launches, including:

• Amazon Bedrock, which he called a multi-billion-dollar annualized run rate business with customer spend growing 60% quarter-over-quarter.
• Nova Forge, which he said allows enterprises to mix proprietary data with Amazon Nova model data earlier in the pre-training process to create customized “Novellas.”
• Strands for building agents from any model and Bedrock Agent Core for deploying agents in production with security and governance.
• Agent offerings including Kiro (developer usage up more than 150% quarter-over-quarter), Amazon Q, AWS Transform, and Amazon Connect, as well as “Frontier Agents” introduced at AWS re:Invent.

On capacity, Olsavsky said AWS added more than 1 GW of capacity in Q4, and that in 2025 AWS added more data center capacity than any other company in the world. Jassy said that even with 24% growth, AWS “could actually grow faster” if supply were available, and cited Amazon adding 3.99 GW of power over the last 12 months, including 1.2 GW in Q4.

Capex and return on invested capital discussion

Jassy said Amazon expects to invest about $200 billion in capital expenditures, “predominantly in AWS,” citing high demand and the company’s expectation it can monetize capacity quickly as it comes online. Addressing investor questions about return on invested capital and possible spending “guardrails,” Olsavsky said capacity being put into service is “immediately useful,” referenced AWS operating margin performance, and reiterated that margins can fluctuate as the company invests in AI and absorbs depreciation, while working to offset those headwinds through efficiencies.

Stores: essentials, grocery expansion, faster delivery, and AI shopping

In the North America segment, Olsavsky reported Q4 revenue of $127.1 billion (up 10%). International revenue was $50.7 billion (up 11% excluding FX). Worldwide paid units grew 12% year-over-year, which he said was Amazon’s highest quarterly growth rate in 2025. Third-party sellers remained central to selection, with a 61% unit mix in Q4.

Profitability improved in North America, with operating income of $11.5 billion and an operating margin of 9%, up from 8% a year earlier. International operating income was $1 billion with a 2.1% operating margin, and Olsavsky said margins expanded year-over-year excluding special charges.

Jassy emphasized everyday essentials and grocery as demand drivers. He said everyday essentials grew nearly twice as fast as other categories in the U.S. in 2025 and represented one out of every three units sold. He also said Amazon has become a grocery destination for over 150 million Americans and cited over $150 billion in gross sales for Amazon’s grocery business. The company plans to expand same-day perishable grocery delivery to more communities in 2026 and to open more than 100 new Whole Foods Market stores over the next few years.

On delivery speeds, Jassy said Amazon again achieved its fastest-ever Prime delivery speeds in 2025. In the U.S., Amazon delivered nearly 70% more items same-day than the year before, and nearly 100 million U.S. customers used same-day delivery last year. Olsavsky added that U.S. Prime members received over 8 billion items the same or next day in 2025, up more than 30%, and said Amazon reduced cost to serve while increasing speed for the third consecutive year.

Jassy also highlighted early results from “quick commerce” via Amazon Now in India, Mexico, and the UAE, delivering thousands of items in about 30 minutes or less. In India, he said Prime members tripled their shopping frequency once they began using the service. He also pointed to the “Add to Delivery” feature in the U.S., saying it represented about 10% of all Prime volume fulfilled through Amazon’s network each week after six months.

On AI-enabled shopping, Jassy said more than 300 million customers used Rufus in 2025, and that customers who use Rufus are about 60% more likely to complete a purchase. He also discussed the “Buy for Me” feature that enables purchases from other online stores, and said usage of Amazon’s visual search tool Lens rose 45% year-over-year.

Advertising, Prime Video, Alexa+, and Project Kuiper “Leo” updates

Amazon Ads delivered another strong quarter. Jassy reported $21.3 billion in advertising revenue, up 22% year-over-year. Olsavsky added that advertising contributed more than $12 billion of incremental revenue in 2025.

Prime Video advertising was cited as a meaningful contributor, with Jassy noting it is available in 16 countries and that Prime Video has an average ad-supported audience of 315 million viewers globally, up from 200 million in early 2024. Jassy also highlighted Thursday Night Football viewership growth, including an average of more than 15 million viewers in the season (up 16%) and a wild card game that reached 31.6 million viewers, which he said was the most-streamed NFL game in history.

Jassy said Amazon made Alexa+ available to all U.S. customers, free for Prime members and $19.99 per month for non-Prime members, and described new interaction options including alexa.com chat, a redesigned mobile app, and integrations with third-party devices.

Finally, management discussed Amazon’s low Earth orbit satellite effort, Amazon Leo. Jassy said Amazon has launched 180 satellites, has more than 20 launches planned in 2026 and more than 30 in 2027, and expects to launch commercially in 2026. Olsavsky said Q1 guidance includes an estimated $1 billion year-over-year cost increase in North America related to Leo, and noted that the company currently expenses most Leo costs as incurred, with expectations that later in the year many costs will be capitalized.

Q1 guidance and AWS backlog

For the first quarter of 2026, Olsavsky guided for net sales of $173.5 billion to $178.5 billion, including a favorable foreign exchange impact of approximately 180 basis points. Operating income is expected to be $16.5 billion to $21.5 billion.

In Q&A, management disclosed AWS backlog of $244 billion, up 40% year-over-year and 22% quarter-over-quarter. Jassy said Amazon is seeing strong AI and core cloud demand and is working to add capacity as quickly as possible, noting that supply remains a constraint across the industry.

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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