Management Guidance Summary
Short-Term (Q1 2026, Jan-Mar 2026)
- Revenue: $173.5-178.5B (+11-15% YoY), includes ~180bps FX tailwind
- Operating Income: $16.5-21.5B (midpoint $19.0B; consensus ~$18.2B)
- AWS momentum: Backlog at $244B (+40% YoY, +22% sequentially), strongest growth in 13 quarters at 24%
- Key commentary: "With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026" — Andy Jassy
Long-Term (Full Year 2026 / Multi-Year)
- Revenue trajectory: Continued double-digit growth driven by AWS reacceleration, advertising, and international expansion
- Margin trajectory: Operating margin stable at ~12%; AWS margin pressure from capacity buildout offset by North America retail efficiency
- Capex: ~$200B planned for 2026 (vs. analyst expectation of $146.6B), focused on AI infrastructure, custom chips, and data centers
- Strategic priorities: Trainium/Graviton custom chips ($10B+ run rate), Rufus AI assistant (300M+ users, $12B incremental annualized sales), Project Kuiper satellite internet, same-day delivery expansion
- AWS infrastructure: Doubling power capacity by end of 2027; Project Rainier cluster with ~500K Trainium2 chips for Anthropic
Upside to Earnings & Multiples
Near-Term (0-6 months)
Q1 2026 operating income guidance midpoint of $19.0B exceeds consensus of ~$18.2B, suggesting potential for another beat. AWS at 24% growth with $244B backlog provides strong visibility. Advertising growth of 23% is a high-margin revenue stream that directly drops to the bottom line. However, the $200B capex announcement creates a near-term valuation overhang as investors model out FCF impact. EPS beat potential of 3-5% exists if AWS maintains 24%+ growth trajectory and retail margins hold.
Medium-Term (6-18 months)
AWS is at a critical inflection point — capacity constraints have limited growth, but the massive infrastructure buildout should unlock pent-up demand from the $244B backlog. Custom chips (Trainium2, Graviton) at $10B+ run rate improve AWS unit economics relative to third-party GPU providers. North America retail margin has expanded from 5.8% to 9.0% over the past year, with further gains from robotics and same-day delivery efficiencies. International profitability is inflecting, with the segment now generating $1B+ quarterly operating income versus near-breakeven a year ago.
Long-Term (18+ months)
Amazon's $200B capex investment positions it as a foundational infrastructure provider for the AI era, similar to its role in cloud computing a decade ago. The advertising business ($68.6B in 2025) continues growing 20%+ and could approach $100B, rivaling Google's ad revenue. Project Kuiper satellite internet opens an entirely new TAM. Rufus AI assistant demonstrates Amazon's ability to embed AI directly into commerce, driving measurable incremental revenue ($12B annualized). If Amazon achieves even modest returns on its AI infrastructure, the earnings power of the platform in 3-5 years is significantly underestimated.
Potential Catalysts
- AWS reacceleration with $244B backlog
- Advertising scaling to $21B+/quarter at 23% growth
- Custom silicon improving cloud unit economics
- $200B capex plan pressuring free cash flow
- AWS margin compression on capacity buildout
- Uncertain AI investment monetization timeline
Latest Quarter Results
Q4 2025 (Oct-Dec 2025) — Reported Feb 5, 2026
| Metric | Reported | YoY | vs Consensus | Next Q Guidance |
|---|---|---|---|---|
| Revenue | $213.4B | +14% | Beat ($211.3B est) | $173.5-178.5B (+11-15% YoY) |
| EPS | $1.95 | +3% | Miss ($1.97 est) | — |
| Operating Margin | 11.7% | +40bps YoY | — | OI $16.5-21.5B |
| Stock Reaction | -4% (after hours) | — | — | — |
Opportunities
- AWS reaccelerated to 24% growth (fastest in 13 quarters) with $244B backlog (+40% YoY)
- Advertising revenue surged to $21.3B (+23% YoY), emerging as a high-margin profit engine
- Custom silicon (Trainium/Graviton) hit $10B+ annualized run rate, improving cloud unit economics
- Rufus AI assistant reached 300M+ users, driving $12B incremental annualized sales
Challenges
- $200B capex guidance for 2026 (53% above 2025) far exceeded $146.6B analyst expectation, sparking sell-off
- EPS of $1.95 missed consensus of $1.97; $2.4B in special charges weighed on bottom line
- TTM FCF/OP collapsed to 7% as massive infrastructure spending consumes free cash flow
- AWS operating margin narrowed to 35% (vs 39.5% in Q1 2025) as capacity buildout ramps
Q3 2025 (Jul-Sep 2025) — Reported Oct 30, 2025
| Metric | Reported | YoY | vs Consensus | Next Q Guidance |
|---|---|---|---|---|
| Revenue | $180.2B | +13% | Beat 1.4% ($177.8B est) | $206-213B (+10-13% YoY) |
| EPS | $1.95 | +36% | Beat 25% ($1.56 est) | — |
| Operating Income | $17.4B ($21.7B adj.) | Flat (adj. +25%) | — | $21.0-26.0B |
| AWS Revenue | $33.0B | +20% | Beat | — |
| Stock Reaction | -3.2% (after hours) | — | — | — |
Opportunities
- AWS reaccelerated to 20% growth, fastest since 2022; $132B annualized run rate
- Advertising revenue $17.7B (+22% YoY), three consecutive quarters of acceleration
- Rufus AI shopping assistant reached 250M users with 60% higher purchase completion
- Gross margin expanded to 50.8% (+180bps YoY), reflecting retail efficiency gains
Challenges
- $2.5B FTC settlement charge and $1.8B severance costs depressed reported operating income
- Free cash flow (TTM) fell to $14.8B from $47.7B on surging capex
- International operating income dipped to $1.2B from $1.5B in Q2 on investment spending
- Stock fell 3.2% after hours despite earnings beats, reflecting capex concerns
Q2 2025 (Apr-Jun 2025) — Reported Jul 30, 2025
| Metric | Reported | YoY | vs Consensus | Next Q Guidance |
|---|---|---|---|---|
| Revenue | $167.7B | +13% | Beat 3.5% ($162.1B est) | $174-179.5B (+10-13% YoY) |
| EPS | $1.68 | +33% | Beat 26% ($1.33 est) | — |
| Operating Income | $19.2B | +31% | Beat ($17.0B est) | $15.5-20.5B |
| AWS Revenue | $30.9B | +17.5% | — | — |
| Stock Reaction | -8.3% (next day) | — | — | — |
Opportunities
- North America operating margin expanded to 7.5% (+190bps YoY) on retail efficiency
- International segment profit surged to $1.5B vs $0.3B in Q2 2024 (+400% YoY)
- Advertising revenue hit $15.7B (+22% YoY), maturing into a high-margin profit center
- Net income surged 34.7% to $18.2B on operating leverage across all segments
Challenges
- Q3 operating income guidance of $15.5-20.5B disappointed (consensus $19.4B), stock fell 8.3%
- AWS operating margin contracted to 32.9% (lowest since late 2023) on capacity buildout
- Tariff uncertainty from 145% China levies impacting third-party sellers
- Heavy AI infrastructure spending clouding near-term free cash flow outlook
Q1 2025 (Jan-Mar 2025) — Reported May 1, 2025
| Metric | Reported | YoY | vs Consensus | Next Q Guidance |
|---|---|---|---|---|
| Revenue | $155.7B | +9% | Beat ~2% | $164-170B (+9-13% YoY) |
| EPS | $1.59 | +62% | Beat 17% ($1.36 est) | — |
| Operating Income | $18.4B | +20% | Beat | $13.0-17.5B |
| AWS Revenue | $29.3B | +17% | — | — |
| Stock Reaction | -2% (after hours) | — | — | — |
Opportunities
- AWS operating margin expanded to 39.5% with operating income of $11.5B (+22% YoY)
- Advertising revenue $13.9B (+19% YoY), a consistent high-growth profit contributor
- North America operating margin improved to 6.2% (+40bps YoY) on fulfillment efficiencies
- Net income surged 64% to $17.1B as operating leverage accelerated across all segments
Challenges
- Q2 operating income guidance of $13.0-17.5B well below consensus of $17.8B, stock fell 2%
- Revenue growth decelerated to 9% YoY (slowest in 4 quarters) on tough comps
- Tariff exposure significant with 145% China levies impacting third-party marketplace sellers
- Management noted "no demand reduction yet" from tariffs but uncertainty remains elevated