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10-Q2026-04-29· deepseek-v4-flash

AMZN · Amazon.com, Inc.

0001018724-26-000014

SEC filing

Summary

Amazon delivered strong Q1 2026 growth, with net sales up 17%, as AWS accelerated and AI-related investment gains boosted profitability.

Key takeaways

Full analysis

Period Performance

Amazon's Q1 2026 results showed strong acceleration across all segments. Net sales increased 17% to $181.5 billion from $155.7 billion in Q1 2025, driven by a 12% increase in North America (to $104.1 billion), a 19% increase in International (to $39.8 billion), and a 28% increase in AWS (to $37.6 billion). Excluding foreign exchange, consolidated growth was 15%, indicating that currency movements added roughly $2.9 billion to reported sales.

Operating income rose to $23.9 billion from $18.4 billion, a 29.6% increase. The operating margin expanded by roughly 130 basis points to 13.1%. Segment operating income improved across the board: North America increased to $8.3 billion, International to $1.4 billion, and AWS to $14.2 billion. AWS remains the primary profit engine, contributing about 60% of consolidated operating income.

Net income climbed to $30.3 billion from $17.1 billion, with diluted EPS of $2.78 versus $1.59. The bottom line was materially boosted by non-operating items, including a $12.3 billion upward adjustment on private company equity investments (primarily Anthropic) and $4.5 billion of reclassification gains from Anthropic convertible note conversions, partially offset by $4.1 billion of discrete tax expense on those gains.

Balance Sheet & Liquidity

Amazon's balance sheet expanded significantly during the quarter. Total assets increased from $818.0 billion at December 31, 2025 to $916.6 billion at March 31, 2026. Cash and cash equivalents rose to $101.8 billion, and marketable securities were $41.3 billion, giving a total of $143.1 billion at fair value (excluding restricted amounts). The company issued $53.4 billion of long-term debt, including $37.0 billion of U.S. dollar-denominated notes and €14.5 billion of euro-denominated notes, pushing long-term debt from $65.6 billion to $119.1 billion (plus current maturities of $2.8 billion).

Total stockholders' equity grew from $411.1 billion to $441.9 billion, with retained earnings increasing by $30.3 billion. Working capital remained positive, with current assets of $255.2 billion and current liabilities of $216.8 billion.

Cash Flow Quality

Q1 2026 operating cash flow was $26.0 billion, slightly below net income of $30.3 billion due to working capital outflows, particularly a $5.8 billion increase in receivables and an $8.0 billion increase in accrued expenses. Investing activities consumed $64.2 billion, driven by $44.2 billion of property and equipment purchases and $15.4 billion of acquisition/investment activity (including $15.0 billion invested in OpenAI's Series C preferred stock). Financing activities provided $52.8 billion, largely from the debt issuance described above.

Trailing twelve-month free cash flow (operating cash flow less net purchases of property and equipment) declined to $1.2 billion from $25.9 billion, reflecting a sharp increase in capital expenditures to support AWS and AI initiatives. The company ended with $104.7 billion in total cash, cash equivalents, and restricted cash.

MD&A / Forward View

Management's commentary attributes the quarter's momentum to continued focus on price, selection, and convenience, with AWS growth driven by increased customer usage. At the same time, management expects technology and infrastructure spending to increase in 2026, particularly to support artificial intelligence, and cautioned that global tariff and trade policy changes are difficult to predict and could affect demand and costs.

For the second quarter of 2026, Amazon guided net sales of $194.0 billion to $199.0 billion (16%-19% growth), with an unfavorable foreign exchange impact of approximately 10 basis points, and operating income of $20.0 billion to $24.0 billion, compared with $19.2 billion in the year-ago quarter. The guidance assumes Prime Day occurs in Q2 2026 and that no additional business acquisitions, restructurings, or legal settlements are concluded.

Notes & Operating Detail

  • Backlog / RPO: AWS long-term contracts not yet recognized were approximately $364 billion as of March 31, 2026, with a weighted-average remaining life of 5.5 years.
  • AI investments: Amazon invested $15.0 billion in OpenAI Series C preferred stock and committed to purchase up to an additional $35.0 billion. Subsequent to quarter-end, Amazon invested $5.0 billion more in Anthropic and established a $20.0 billion financing facility for Anthropic. The OpenAI commercial arrangement was also expanded by $100.0 billion over 8 years.
  • Stock-based compensation: Total stock-based compensation expense was $4.0 billion in Q1 2026, up from $3.7 billion in Q1 2025.
  • Share repurchases: No shares were repurchased in Q1 2025 or Q1 2026; $6.1 billion remained under the March 2022 program.
  • Leases: Operating lease liabilities were $91.6 billion and finance lease liabilities were $13.3 billion at quarter-end.
  • Taxes: Income tax provision was $9.6 billion, including $4.1 billion of discrete tax expense, largely tied to Anthropic gains. Cash paid for income taxes was $1.3 billion in the quarter.