Amazon raised its 2026 capital expenditure forecast to $220 billion, CEO Andy Jassy announced Thursday, citing rising memory prices and surging demand for artificial intelligence infrastructure that the company says it cannot fully satisfy even at that elevated spending level.
The revised forecast marks a $20 billion increase from the $200 billion target Amazon set in February. Jassy told investors on the company’s second-quarter earnings call that even with the higher spending, Amazon will not have enough capacity to meet all the demand it faces in 2026, adding that this dynamic will likely persist into 2027 and that demand for 2028 is already striking.
Amazon’s capital expenditures hit $54.2 billion in the second quarter alone, up 68% year over year and above the $49.35 billion consensus estimate from StreetAccount. The spending surge reflects the company’s race to build out data centers filled with AI chips that cloud customers are demanding at an unprecedented rate.
AWS revenue expanded 37% year over year to $42.23 billion in the second quarter, marking the cloud unit’s fastest growth since 2021 and surpassing analyst expectations of 31% growth. AWS’s AI business and chip division each generated over $25 billion in annualized revenue, more than doubling from the prior year.
The lavish spending has caused Amazon’s free cash flow to flip negative. The company’s free cash flow for the trailing twelve months amounted to an outflow of $7.6 billion, compared with an inflow of $18.2 billion one year earlier. Jassy emphasized that these investments are necessary to fulfill surging demand, noting that AWS’s contracted backlog reached $496 billion during the quarter.
Wall Street had anticipated Amazon would boost its capex forecast after Alphabet hiked its own spending plans to as high as $205 billion. The hyperscaler spending race has become a defining theme of 2026 as Microsoft, Google, and Amazon compete to build the physical infrastructure required for the next generation of AI services.
Amazon’s stock shot up more than 10% in extended trading following the earnings release, indicating that investors are willing to tolerate the near-term spending in exchange for long-term AI-driven growth. Net income for the second quarter was $62.6 billion, or $5.75 per share, compared with $18.2 billion, or $1.68 per share, a year earlier, boosted by pre-tax income of $53.4 billion primarily from investments in AI lab Anthropic.
Sources:
- CNBC – Amazon Q2 2026 Earnings
- CNBC – AWS Earnings Q2 2026
- TechCrunch – Investors Love AI Cloud Hosts