Amazon reported first-quarter 2026 revenue of $181.5 billion and diluted earnings per share of $2.78, obliterating analyst consensus of $177.3 billion and $1.64 respectively, according to LSEG data. Revenue climbed 17 percent year-on-year while operating income reached a record $23.9 billion at a 13.1 percent margin — the highest the company has ever posted. Shares rose more than 4 percent in after-hours trading.
The headline number was AWS, which grew 28 percent year-on-year to $37.6 billion, its fastest expansion in 15 quarters. The cloud unit added $2 billion sequentially from Q4 2025, the largest quarter-on-quarter jump in AWS history. AI services within AWS now contribute more than $15 billion in annualized revenue run rate in their first three years of availability, and the Bedrock model-hosting platform counts more than 125,000 customers, including nearly 80 percent of the Fortune 100. Token volume processed through Bedrock in Q1 alone exceeded all prior years combined, according to CFO Brian Olsavsky.
The $20 Billion Chip Business Nvidia Should Watch
Perhaps the most striking disclosure was the scale of Amazon’s custom silicon portfolio. Graviton CPUs, Trainium AI accelerators, and Nitro data-processing units together now exceed a $20 billion annual revenue run rate, growing at triple-digit percentages year-on-year. CEO Andy Jassy told analysts that if the chips business were a standalone entity selling its output to AWS and third parties, the implied run rate would approach $50 billion.
Trainium2 chips deliver roughly 30 percent better price-performance than comparable GPUs, Jassy said, and the next-generation Trainium3 promises an additional 30 to 40 percent improvement over its predecessor. Total Trainium revenue commitments now exceed $225 billion. Graviton, meanwhile, is used by 98 percent of the top 1,000 EC2 customers, offering up to 40 percent better price-performance than x86 alternatives.
The custom chip push is strategically significant. Amazon is reducing its dependence on Nvidia at the exact moment hyperscaler GPU demand is colliding with supply constraints. It also gives AWS a structural cost advantage that competitors relying entirely on merchant silicon cannot replicate.
Advertising, Leo, and the Capex Question
Beyond cloud, Amazon’s advertising business delivered $17.2 billion in revenue, up 22 percent year-on-year, fueled by full-funnel ad products and new partnerships with Netflix, Comcast, and Samsung. Subscription services rose 15 percent to $13.4 billion, while North America stores saw 15 percent unit growth — the highest since the COVID-era surge.
Amazon Leo, the company’s satellite internet constellation, now has more than 250 satellites in orbit with commercial service on track for Q3 2026. The pending $11.6 billion Globalstar acquisition will add direct-to-device capabilities and spectrum assets, with Apple confirmed as a customer for iPhone and Apple Watch satellite connectivity. Delta Air Lines, JetBlue, AT&T, Vodafone, and NASA are among the announced partners.
The investment tab is steep. Capital expenditures hit $43.2 billion in Q1 alone, and Amazon has guided full-year 2026 capex at approximately $200 billion, the largest among U.S. hyperscalers. Trailing twelve-month free cash flow fell 95 percent to just $1.2 billion as AI infrastructure absorbs virtually all operating cash. Olsavsky cautioned that early-year free cash flow will remain compressed until new capacity is monetized.
The AI Partnerships Stack
Amazon’s deal-making pace has accelerated. Since the Q4 earnings call, the company has signed or expanded agreements with OpenAI, Anthropic, and Meta, alongside enterprise clients including Uber, U.S. Bank, Southwest Airlines, the U.S. Army, and Bloomberg. The Anthropic relationship alone includes up to $25 billion in equity investment and a $100-billion-plus decade-long AWS commitment — a figure notably excluded from the already-record $364 billion AWS backlog.
For Q2 2026, Amazon guided revenue between $194 billion and $199 billion, implying 16 to 19 percent year-on-year growth and factoring in an expected Prime Day contribution. The guidance comfortably exceeds current Street estimates of roughly $191 billion.
“We’re in the middle of some of the biggest inflections of our lifetime,” Jassy said. The Q1 numbers suggest the market is starting to agree.
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