Amazon (AMZN) Stock Surges 4% on Strong AWS Performance and $225B AI Chip Backlog

Key Takeaways

• Amazon Web Services (AWS) delivered 28% year-over-year revenue growth, reaching $37.6 billion and surpassing analyst projections
• First-quarter earnings per share hit $2.78 compared to consensus estimates of $1.63; overall revenue reached $181.5 billion versus $177.3 billion anticipated
• CEO Andy Jassy disclosed more than $225 billion in customer commitments for Trainium, the company’s proprietary AI processing chip
• Second-quarter revenue outlook of $194–$199 billion exceeded analyst projections of $189 billion; operating profit guidance at the midpoint fell marginally short of expectations
• Trailing twelve-month free cash flow plummeted 95% year-over-year to $1.2 billion; first-quarter capital spending reached $44.2 billion

Amazon posted impressive first-quarter results on Wednesday, with headline figures that surpassed Wall Street’s expectations across the board. Earnings per share landed at $2.78 versus the $1.63 consensus, while total revenue climbed to $181.5 billion, comfortably above the $177.3 billion analysts had forecast.

$AMZN | Amazon Q1’26 Earnings Highlights

Sales: $181.5B (Est. $176.98B-$177.3B) ; +17% YoY
EPS: $2.78 (Est. $1.62-$1.63)
AWS Net Sales: $37.6B (Est. ~$36.8B) ; +28% YoY
Operating Income: $23.9B (Est. $20.9B) ; vs $18.4B in Q1’25

Q2 Guide:
Sales:… pic.twitter.com/GPWGds41yg

— Wall St Engine (@wallstengine) April 29, 2026

The cloud computing division stole the spotlight. Amazon Web Services generated $37.6 billion in revenue, reflecting 28% year-over-year expansion that exceeded the $36.9 billion Wall Street estimate and marked an acceleration from the previous quarter’s 24% growth rate. CEO Andy Jassy characterized this as AWS’s strongest growth performance in 15 quarters.

Amazon.com, Inc., AMZN

Shares initially retreated in extended trading but quickly changed direction. By the conclusion of the earnings conference call, AMZN had rallied approximately 4% in after-hours trading.

The turnaround occurred after Jassy revealed that Amazon has secured more than $225 billion in future revenue commitments tied to Trainium, the company’s custom-designed AI chip. This disclosure captured investor attention and transformed sentiment during the call.

Cash Flow Under Pressure

However, not all metrics painted a rosy picture. Trailing twelve-month free cash flow collapsed 95% year-over-year, falling to merely $1.2 billion. First-quarter capital expenditures totaled $44.2 billion, representing a surge of more than 76% compared to the same period last year and exceeding analyst expectations of $41.4 billion.

Amazon has been channeling substantial resources into artificial intelligence infrastructure. Earlier this year in February, company leadership projected approximately $200 billion in capital investments for the full 2026 fiscal year — a projection that initially unsettled investors. During Wednesday’s call, Jassy reaffirmed that spending target, characterizing the investment as essential to satisfy customer demand that presently exceeds available capacity.

In his shareholder letter released earlier this month, Jassy emphasized that a significant portion of the 2026 capital allocation is anticipated to yield returns throughout 2027 and 2028.

The second-quarter operating income forecast ranged from $20 billion to $24 billion. With a midpoint of $22 billion, the guidance landed marginally below Wall Street’s $22.7 billion projection, introducing a note of caution to an otherwise strong earnings report.

Strategic Partnerships, Advertising, and Logistics

Amazon has been executing strategic initiatives beyond its quarterly results. The previous week saw the company announce a deal to invest as much as $25 billion in Anthropic, with the AI startup pledging to deploy over $100 billion on AWS infrastructure throughout the coming decade. Just one day before earnings, Amazon integrated all of OpenAI’s newest models along with its Codex development agent into AWS.

Advertising revenue climbed 24% year-over-year to $17.2 billion. The company has been broadening advertisement placement opportunities across Prime Video streaming and even physical grocery cart surfaces.

The second-quarter revenue guidance range of $194–$199 billion surpassed analyst consensus of $188.9 billion, though management noted the projection incorporates a modest headwind from currency exchange rate fluctuations.

Amazon previously announced this month that AWS artificial intelligence services have crossed the $15 billion threshold in annualized revenue run rate.

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