Amazon just dropped its first-quarter results for 2026, and the numbers are honestly a bit staggering. If you just glance at the headlines, you'll see a massive jump in net income to $30.3 billion. That’s up from $17.1 billion a year ago. But if you want to understand what's really happening inside the Seattle giant, you have to look past that bottom-line number.
Most of that "profit" surge came from a $16.8 billion paper gain on their investment in Anthropic. Without that, earnings were basically in line with what the smart money expected. The real story isn't the accounting win—it's the fact that Amazon Web Services (AWS) is suddenly growing like a startup again. Don't miss our previous article on this related article.
The AWS Rebound is Real
For a while there, everyone was worried AWS was slowing down. It wasn't. It was just catching its breath. In Q1 2026, AWS sales jumped 28% to $37.6 billion. This is the fastest growth we’ve seen in nearly four years.
Why does this matter? Because AWS is the engine that funds every other crazy experiment Amazon wants to try. It pulled in $14.2 billion in operating income this quarter alone. CEO Andy Jassy noted that the AI revenue run rate for AWS is already over $15 billion. To put that in perspective, it took the original AWS years to hit those kinds of numbers. To read more about the history here, Reuters Business provides an informative breakdown.
AI is Eating the Budget
You might notice that while profits are up, free cash flow took a hit. It dropped to $1.2 billion for the trailing twelve months, compared to nearly $26 billion last year.
Don't panic. This wasn't a mistake. It's a choice.
Amazon spent a jaw-dropping $59 billion more on property and equipment this year than last. They’re building data centers as fast as they can to keep up with the demand for generative AI. I’ve seen companies overspend before, but this feels different. They aren't just buying servers; they're building the infrastructure that everyone else’s AI will run on for the next decade.
The Stores are Moving Faster Too
It’s easy to forget that Amazon still sells a lot of physical stuff. Net sales for the whole company hit $181.5 billion, up 17% from last year.
What’s interesting is the unit growth. The number of items people are actually buying grew 15%. That’s the best rate we’ve seen since the pandemic days. Amazon has been obsessed with shipping speed lately, delivering over a billion items same-day or overnight in the U.S. so far this year. When things show up in four hours, you tend to buy more.
The Advertising Sleeping Giant
If you want to know where the high-margin money is moving, look at the ads. Amazon's advertising business grew 24% this quarter, reaching $17.2 billion.
On a trailing-twelve-month basis, their ad revenue has topped $70 billion. They’re no longer just a "third player" behind Google and Meta. They are a legitimate titan. Because they have the purchase data, their ads are simply more effective for brands. You don't just see an ad; you click and buy in the same ecosystem.
Breaking Down the Segments
If we look at how the different parts of the house performed, it’s clear that efficiency is the new mantra.
- North America: Sales hit $104.1 billion, and operating income jumped to $8.3 billion. They're finally making real money on domestic retail.
- International: This segment is usually a drag, but it posted $1.4 billion in operating income. It's growing 19% year-over-year.
- AWS: As mentioned, the 28% growth is the headline here, with margins remaining incredibly healthy at around 37.6%.
What You Should Watch Next
The market's reaction was a bit mixed, with the stock dipping slightly after hours. Investors are clearly a little spooked by the massive capital expenditure (Capex) spending. When a company spends $60 billion on "stuff," people get nervous about when they'll see that cash again.
But look at the guidance. Amazon expects Q2 sales to be between $194 billion and $199 billion. That’s 16% to 19% growth. They aren't planning for a slowdown.
If you're tracking this company, stop obsessing over the $30 billion net income number. It's inflated by the Anthropic stake. Instead, watch the Capex-to-revenue ratio and the AWS growth rate. As long as AWS keeps accelerating, Amazon can afford to spend whatever it takes to win the AI war.
Check your portfolio for exposure to big tech infrastructure. The "landlord" of the internet just signaled that they’re building more apartments, and the rent is going to be expensive. Use the current price volatility to evaluate if you’re comfortable with their long-term AI bet. If you believe AI is a bubble, this quarter's cash flow drop is a red flag. If you believe AI is the future, Amazon just showed you they're the ones building it.
