Amazon Raises Capex to $220B as AWS Cloud Revenue Surges 37%

Amazon announced a $20 billion increase in annual capital spending, raising its 2026 technology investment forecast to $220 billion, following strong second-quarter earnings released July 30. The spending boost reflects accelerating demand for cloud infrastructure and AI services, with AWS generating $42.2 billion in quarterly revenue—a 37% year-over-year increase and the fastest growth rate in 18 quarters.

CEO Andy Jassy stated that demand for AI inference and cloud computing capacity continues to outstrip available server capacity, with expansion already largely committed through 2028. AWS operating income reached $16.6 billion in Q2, up from $10.2 billion a year earlier, demonstrating that revenue growth is accompanied by expanding profitability. Amazon's AI and custom chip businesses have each surpassed a $25 billion annualized revenue run rate, growing at triple-digit year-over-year rates. The company's total quarterly sales reached $200.6 billion, up 20% year over year, with backlog standing at $496 billion and growing triple digits.

The capital spending increase includes investments in data center infrastructure, GPUs, semiconductors, robots, satellites, and custom silicon chips including Graviton processors and Trainium AI chips. Jassy cited higher memory chip costs as a primary driver of the increased spending. Despite the elevated capex, Amazon ended Q2 with $7.6 billion less cash than a year prior, marking its first period of negative free cash flow in 2026. The company raised its full-year capex guidance from $200 billion to $220 billion on July 30, even as it has begun drawing down cash reserves.

Market reaction was strongly positive: Amazon's stock rose approximately 9–15% in after-hours and Friday trading following the earnings announcement. Analysts attributed the gains to AWS acceleration, evidence that massive infrastructure investments are translating into revenue growth, and expanding operating margins. However, concerns remain among some investors about the sustainability of high capex spending and whether AI demand will justify the buildout long-term. Total operating income for Amazon increased 43% year over year to $27.5 billion in Q2. Net profit was reported at $62.6 billion ($5.75 per share), though this figure was significantly boosted by over $53 billion in non-operating income, primarily from Amazon's investment in AI startup Anthropic.