Amazon Web Services posted its strongest revenue growth since 2021 in the second quarter of 2026, expanding 37% year over year to $42.23 billion, as surging demand for artificial intelligence infrastructure and the company’s homegrown chip technology propelled the cloud computing giant past analyst expectations.
The growth rate accelerated sharply from 28% in the first quarter and significantly exceeded the $40.54 billion consensus estimate from analysts surveyed by StreetAccount. AWS’s artificial intelligence business and its chip division each generated over $25 billion in annualized revenue, more than doubling from the previous year, underscoring the rapid monetization of AI workloads in the cloud.
AWS generated $16.62 billion in operating income during the second quarter, well above the $13.62 billion consensus, representing a 36.8% operating margin. This compares favorably to Google Cloud’s 35.6% margin. AWS accounted for nearly 61% of Amazon’s total operating income, highlighting its continued importance to the parent company’s profitability.
Amazon remains the dominant force in cloud computing, but rivals are closing ground rapidly. Microsoft reported Wednesday that Azure and other cloud services revenue grew 43% in the quarter, while Alphabet’s Google Cloud surged 82% to nearly $25 billion in quarterly revenue. The competitive dynamics have shifted as all three hyperscalers invest aggressively in AI infrastructure and compete for enterprise cloud workloads.
Capital expenditures reached $54.21 billion in the second quarter, up 68% year over year and above the $49.35 billion consensus. Amazon CEO Andy Jassy said the company would spend $220 billion in capital expenditures this year, up from an earlier forecast of $200 billion, driven by rising memory prices and insatiable demand for AI compute capacity.
During the quarter, AWS announced it would start hosting OpenAI models, marking a significant competitive win. Meta also committed to using hundreds of thousands of AWS’s Graviton chips in a three-year deal. These partnerships demonstrate AWS’s strategy of becoming the neutral infrastructure layer for the AI industry, hosting both competitors and partners alike on its cloud platform.
The performance reinforces the broader trend of accelerating cloud spending as enterprises and AI startups race to deploy machine learning workloads. Amazon’s stock surged more than 10% in extended trading following the results, signaling investor confidence in the company’s AI-driven growth trajectory despite the massive capital investment required.
Sources:
- CNBC – AWS Earnings Q2 2026
- CNBC – Amazon Q2 2026 Earnings
- TechCrunch – Investors Love AI Cloud Hosts