On July 30 in the United States, Amazon announced its second-quarter results. Total sales reached $200.6 billion, maintaining year-over-year growth according to the company’s press release. Retail, third-party seller services, advertising, and cloud computing are all continuing to advance, with no obvious weaknesses across the overall performance.
What stands out most is net income, which reached $62.6 billion, compared to only $27.5 billion in operating profit during the same period. According to Amazon, the difference does not stem from a sudden surge in a new business, but rather from a substantial investment-related gain recorded in the lower portion of the income statement.
This profit makes the earnings report look like a sprint to profitability, bringing to the forefront the real questions that matter: What exactly drove Amazon’s profits this quarter, and how much of that money remains on the cash balance sheet?
Where did the $62.6 billion come from?
According to Amazon’s consolidated income statement, operating profit is the result of contributions from businesses such as retail, advertising, and AWS at the operational level. Below the operating profit line are interest and other income, with the most notable item being $53.4 billion in non-operating pre-tax other income. The company’s press release provided only one qualifier: this primarily stems from its investment in the large model company Anthropic.
The chart is not correcting the number itself, but rather the way it is being interpreted. $53.4 billion is not additional cloud services sold by AWS that quarter, nor is it cost savings from retail operations. It occurs after operating profit and falls under non-operating items related to investments.
This also explains why you can't simply subtract it from net income and announce a "net income ex-Anthropic." This revenue is reported on a pre-tax basis, and Amazon does not separately disclose its tax burden. A more reliable operational metric, rather than artificially back-calculating, is the $27.5 billion operating profit, which directly reflects the performance of each business segment.
Why can AWS sustain operating profit?
Putting investment-related gains aside, the accelerated growth of the cloud computing business, AWS, remains striking. Recalculating based on the revenue disclosed in the financial report, AWS grew 36.8% year-over-year this quarter.
According to the same earnings report, AWS's operating profit reached $16.6 billion, nearly two-thirds higher than the same period last year.
Based on the segmented operating profits listed in the financial report for North America, International, and AWS, AWS alone contributed 60.5% of the company’s operating profit in the latest quarter.
The changes in the chart are more intuitive than a revenue statement. Amazon’s largest revenue source remains North American retail, but the blue segment has long been a critical pillar of the profit statement, and the latest quarter saw absolute profits rise further. International operations continue to generate profits, and North American business is also improving, relieving AWS of the burden of carrying all the weight alone. However, once you shift your focus from sales to profits, AWS’s position immediately becomes impossible to overlook.
This is precisely the most practical significance of cloud business for Amazon. It’s not just about providing a faster-growing segment for the AI narrative, but also creating a larger operational buffer for simultaneous investments in retail networks, delivery capabilities, and data centers.
Why didn’t the money earned stay in free cash flow?
An increase in operating profit does not mean that cash will accumulate proportionally. Another table in Amazon’s press release details the use of funds over the past 12 months, not just a single quarter’s expenses.
For the trailing twelve months ending in the second quarter of 2026, according to the company’s press release, Amazon’s operating cash flow was $161.4 billion, while net purchases of property and equipment amounted to $169.0 billion. The two TTM lines crossed at this point, and TTM free cash flow turned negative.
The "net acquisition of property and equipment" here is not merely an abstract capital expenditure. It includes investments in data centers, servers, and other long-term assets, net of proceeds from sales and incentives. The company states that the year-over-year increase in this expense primarily reflects investments in AI. However, equating it entirely to AI would narrow the interpretation of the financial report.
This contrast also adds depth to the $62.6 billion figure. Investment gains on the income statement boost net profit, while infrastructure investments on the cash flow statement are rapidly consuming cash generated from operating activities. Both statements can be true simultaneously, yet they answer two entirely different questions.
Beyond AWS, the chassis is also accelerating.
Focusing solely on AWS makes it easy to portray Amazon as a cloud computing company. According to the company’s revenue breakdown, AWS’s year-over-year growth rate has increased from 17.5% to 36.8%.
According to the same revenue category table, advertising services grew by 26.2% year-over-year this quarter. Although third-party seller services and online stores did not grow as fast as AWS, both are accelerating compared to a year ago. Together, they determine whether the retail base can continue to bear the costs of logistics, fulfillment, and user acquisition.
The blue bar for AWS, non-operating pre-tax other income primarily from Anthropic investments, and equipment expenditures on the cash flow statement all appeared in the same quarterly report.