To The Moon

$Amazon.com(AMZN)$’s second-quarter results, released on July 30, 2026 for the quarter ended June 30, supplied the clearest evidence yet that its enormous artificial-intelligence investment programme is producing commercially meaningful growth. The quarter also exposed the cost of that expansion: Amazon is generating more operating cash than ever while simultaneously consuming cash through an infrastructure buildout of exceptional scale.

Revenue increased 20% year over year to $200.6 billion, while operating income rose 43% to $27.5 billion. The most important figure was Amazon Web Services revenue, which increased 37% to $42.2 billion, its fastest growth in 18 quarters and equivalent to an annualised revenue run rate of approximately $169 billion. AWS operating income reached $16.6 billion, compared with $10.2 billion a year earlier. Amazon also said its AI and custom-chip businesses had each exceeded annualised run rates of $25 billion. Amazon’s official second-quarter earnings release provides the complete figures.

This matters because Amazon’s AI thesis is no longer based only on future capacity or management promises. AWS growth accelerated from 17.5% in the corresponding 2025 quarter to 36.7% in the latest quarter. The business therefore appears to be receiving both increased computing demand from existing customers and new AI workloads. Operating leverage was equally encouraging: AWS operating income grew much faster than revenue, indicating that expansion did not require Amazon to sacrifice segment profitability.

Amazon’s other businesses reinforced the result. North American sales increased 16% to $116.2 billion, international sales increased 15% to $42.2 billion and advertising grew 26%. Management also reported that more than 40% additional items were delivered on the same day or overnight during the first half of the year. Faster fulfilment can improve customer retention while distributing Amazon’s logistics costs across more orders.

The bear case sits in the cash-flow statement. Trailing-12-month operating cash flow rose 33% to $161.4 billion, but free cash flow moved from an $18.2 billion inflow a year earlier to a $7.6 billion outflow. Purchases of property and equipment increased by $66.1 billion, primarily because of AI investment. The company is consequently translating strong operating performance into data centres, networking equipment and chips rather than near-term distributable cash.

Reported net income also requires careful interpretation. It increased to $62.6 billion, but included $53.4 billion of pre-tax non-operating income, mainly from Amazon’s investment in Anthropic. That valuation gain is economically valuable, but it should not be treated as recurring operating profit.

Amazon shares initially jumped after the release, although the session’s wide trading range suggested that investors were debating how much of the AWS acceleration was already reflected in expectations. The earnings reaction becomes more constructive if the stock holds above the post-report breakout area rather than surrendering the move. A failed breakout would imply that capital spending and valuation remain stronger forces than the earnings surprise.

The next catalysts are AWS growth, custom-chip adoption, operating margins and the direction of free cash flow. Investors should also watch whether growth slows after Prime Day was moved into the June quarter, making year-over-year retail comparisons less tidy.

AMZN Weekly Chart

$Amazon.com(AMZN)$’s weekly chart remains constructive within a broader uptrend, but the stock is currently trading between a major support zone at $213–$225 and overhead resistance at $270–$278, leaving it in a mid-range position rather than at an ideal entry point.

The recent pullback has so far held above former breakout support, while the rising 200-week moving average near $179 confirms that the longer-term structure remains intact; however, momentum has weakened and the stock must reclaim roughly $245–$250 before a renewed advance toward $270 becomes more convincing.

A cleaner bullish trade would be a 90–120 DTE $250/$275 call debit spread entered only after a confirmed weekly close above $250, which limits premium outlay while targeting the upper resistance zone. Alternatively, traders willing to own Amazon could wait for a successful retest of $213–$225 and consider a 45–60 DTE $210/$195 bull put spread. A decisive weekly close below $213 would weaken the setup and increase the risk of a deeper retracement toward approximately $200, followed by the rising long-term average near $179.

The evidence leans bullish because AWS growth, AWS profitability and advertising are accelerating together. That view would be invalidated if AWS growth decelerates sharply while capital expenditure remains high enough to keep free cash flow negative for an extended period.

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Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or trading advice. The views expressed are personal opinions based on publicly available information and are subject to change without notice. Investors should conduct their own research and consider their financial situation, risk tolerance, and investment objectives before making any investment decisions. I do not guarantee the accuracy or completeness of the information presented.