On July 30, US time, Amazon announced its second-quarter performance. The total revenue reached $200.6 billion, with a year-over-year growth according to the company's press release. Retail, third-party seller services, advertising, and cloud computing are all continuing to progress, and the overall performance seems solid.
Most notably, the net income stands out. It reached $62.6 billion, while the operating income for the same period was only $27.5 billion. According to Amazon, the variance between the two did not stem from a sudden surge in a new business but rather from a significant investment-related gain at the bottom of the income statement.
This gain made the financial report read like a profitability sprint, bringing the real questions worth exploring to the forefront. What exactly is Amazon making money from this quarter, and how much of that money is still sitting on the balance sheet.
$62.6 Billion: Where Does It Come From?
According to Amazon's consolidated statement of income, operating income is the result of the collective performance of businesses such as retail, advertising, and AWS at the operating level. Below the operating income line, there are interest and other income, with the most prominent being $53.4 billion in non-operating pre-tax other income. The company's press release only provided a single-layer explanation, stating that it mainly stems from the investment in the large-scale company Anthropic.
The objective of this chart is not to correct the numbers themselves but the perspective from which they are viewed. The $53.4 billion is not from a surge in cloud services sold by AWS for the quarter or costs saved in retail operations. It occurs after operating income and belongs to non-operating items related to investments.
This also explains why it cannot be simply subtracted from net income, followed by an announcement of "Net Income Excluding Anthropic." This income is pre-tax, and Amazon did not separately disclose its tax impact. Instead of artificially deducing, a more prudent operational gauge is the $27.5 billion operating income, which is directly linked to the performance of each segment.
Why AWS Can Support Operating Income
Setting investment-related gains aside, the acceleration of the cloud computing business AWS remains remarkable. Recalculating revenue as disclosed in the financial statements, AWS posted a 36.8% year-over-year growth this quarter.
According to the same financial statement, AWS' operating income reached $16.6 billion, nearly two-thirds higher than the same period last year.
Calculating the profit for the North America, International, and AWS segments as listed in the financial statements, in the latest quarter, AWS alone contributed 60.5% of the company's operating income.
The transformation shown in the graph is more intuitive than a simple income statement. Amazon's largest income plate is still in North American retail, but the blue portion has always been a critical support wall for the profit statement, and the absolute profit for the latest quarter has risen once again. The international business remains profitable, and the North American business is also improving, relieving AWS from bearing all the pressure alone. However, once the focus shifts to profit rather than revenue, AWS's position immediately becomes hard to ignore.
This is precisely the most practical meaning of cloud services for Amazon. It not only provides a higher-growth division for AI narratives but also creates a thicker operational buffer for the retail network, delivery capacity, and data center synchronizations.
Why Has the Earned Money Not Stayed in Free Cash Flow
A thicker operating profit does not mean that cash will settle in proportion. Another table in Amazon's press release discusses the cash flow direction over the past 12 months, rather than the expenditure for a single quarter.
For the 12 months ending in the second quarter of 2026, according to the company's press release, Amazon's operating cash flow was $161.4 billion, and property and equipment net purchases were $169 billion. The two TTM lines intersected at that point, and TTM free cash flow also turned from positive to negative.
Here, "property and equipment net purchases" are not just an abstract capital expenditure. It includes investments in data centers, servers, and other long-term assets, net of proceeds from sales and adjusted for incentives. The company stated that the year-over-year increase in this expenditure primarily reflects investments in AI. Saying that it all equals AI would actually narrow down the financial report.
This contrast also makes the $62.6 billion more layered. Investment income on the income statement boosts net profit, while infrastructure investments on the cash flow statement rapidly consume the cash generated by operating activities. Both can coexist but answer two completely different questions.
Besides AWS, the Chassis is also Accelerating
If we only focus on AWS, it is easy to depict 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%.
As per the same revenue breakdown, advertising services saw a 26.2% year-over-year growth rate this quarter. Although third-party seller services and the online store are not running as fast as AWS, they are both gaining speed compared to a year ago. Together, they determine whether the retail chassis can continue to bear the costs of delivery, fulfillment, and user acquisition.
The blue pillar of AWS, equipment investment in the non-operating pre-tax other income and cash flow statement mainly backed by Anthropic, happened to be featured in the same quarterly report.
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