Amazon jumped after its Q2 report, and I expect a similar performance for the third quarter.
Amazon jumped after its Q2 report, and I expect a similar performance for the third quarter.
It's nearly Amazon's (AMZN -1.87%) turn to step up to the earnings podium. The e-commerce and cloud computing mega-giant is scheduled to report third-quarter earnings on Oct. 29, and I think investors have plenty of reasons to be optimistic.
Amazon spent much of 2026 defending its massive investments in artificial intelligence (AI) infrastructure, with capital expenditures expected to reach approximately $220 billion this year. That's an enormous amount of money, even for a company of Amazon's size.
However, the market isn't necessarily impressed by big spending announcements anymore. I've argued that Wall Street is in the "show-me" phase of AI, where investors want evidence that those investments are generating meaningful returns.
Amazon delivered some of that evidence in July, when its cloud computing business reported outstanding growth and Amazon stock jumped 12% in a single day. If that momentum continues into Q3, I think Amazon stock could soar once again following its upcoming earnings report.
Amazon is giving Wall Street what it wants
Amazon Web Services (AWS) is unquestionably the company's most important generator of profits, even though its online retail operations account for a much larger share of revenue. AWS revenue increased 37% from a year ago to $42.2 billion in the second quarter, its fastest growth in 18 quarters. Operating income jumped to $16.6 billion from $10.2 billion a year earlier.
That's particularly impressive when compared with Amazon's retail operations. Its North America segment generated $116.2 billion in revenue, but only $9.1 billion in operating income.
AWS also reported an annualized revenue run rate exceeding $25 billion for its AI business, while its custom chips business, which includes the Trainium AI processor, reached a similar annualized pace.
Those figures demonstrate that Amazon is doing more than building expensive data centers and hoping customers eventually show up. Companies are already paying for the computing capacity and AI services that AWS provides.
Averytin News Financial update.