Amazon.com (AMZN) reported diluted earnings per share of 5.75 for the second quarter ended June 30, 2026, against an analyst estimate of 1.82, on revenue of $200.61B. The headline profit was far above operating profit, and free cash flow was negative because capital spending outran operating cash. With the next report due Oct. 29, 2026, those two facts frame what investors will look for.
Key facts
- Q2 FY2026 (ended June 30, 2026, reported July 30, 2026): revenue was $200.61B, higher than the $197.03B estimate and 19.6% above the year-ago quarter.
- Q2 FY2026 earnings: diluted EPS was 5.75 versus an estimate of 1.82. Net income was $62.65B, versus $18.16B a year earlier.
- Q2 FY2026 cash flow: operating cash flow was $45.39B, capital expenditure was $-54.21B, and free cash flow was $-8.82B.
- Next earnings date: Oct. 29, 2026. Analysts expect EPS of 1.96 and revenue of $202.16B.
- Share price on Oct. 23, 2026: 248 USD, down 0.95% on the day. The 52-week range is 196-287.2 USD.
- Stock Expert AI MoonshotScore V2: 74.8 (Strong). The valuation pillar is the weak spot at 32.
What happened
Amazon reported its second-quarter results on July 30, 2026, and filed them the next day. Revenue beat the estimate, and EPS came in well above it.
The EPS beat needs context. Operating income, the profit from running the business before interest, taxes and investment gains or losses, was $27.46B. Net income was $62.65B, much larger than operating income. That gap means a large non-operating item, such as a gain on investments, likely boosted the bottom line. The data we use does not say what it was. For that reason, operating income and margins are a cleaner read on the core business than the headline EPS.
The core business did improve. Operating margin was 13.7% in the quarter, up from 11.4% in the year-ago quarter. Gross margin, the share of revenue left after direct costs, was 52.3%.
Where the growth came from. Every major revenue line grew from the year-ago quarter (Q2 FY2025):
- Amazon Web Services (AWS), the cloud computing unit: AWS revenue was $42.23B, up from $30.87B.
- Advertising Services: $19.81B, up from $15.69B.
- Third-Party Seller Services (fees from outside merchants): $46.78B, up from $40.35B.
- Online Stores: $70.43B, up from $61.48B.
- Subscription Services: $13.73B, up from $12.21B.
- Physical Stores: $5.79B, up from $5.59B.
The five-quarter trend. Here is how revenue and margins moved, oldest to newest:
| Quarter (ended) | Revenue | Gross margin | Operating margin | Net income | |---|---|---|---|---| | Q2 FY2025 (June 30, 2025) | $167.70B | 51.8% | 11.4% | $18.16B | | Q3 FY2025 (Sept. 30, 2025) | $180.17B | 50.8% | 9.7% | $21.19B | | Q4 FY2025 (Dec. 31, 2025) | $213.39B | 48.5% | 11.7% | $21.19B | | Q1 FY2026 (March 31, 2026) | $181.52B | 51.8% | 13.1% | $30.25B | | Q2 FY2026 (June 30, 2026) | $200.61B | 52.3% | 13.7% | $62.65B |
Operating margin fell to its low in the September 2025 quarter and has risen in each quarter since. The holiday quarter (Q4 FY2025) had the most revenue but the lowest gross margin of the five.
Cash flow tells a different story. Free cash flow is operating cash flow minus capital expenditure (money spent on data centers, equipment and similar assets):
- Q2 FY2025: free cash flow of $332.0M
- Q3 FY2025: $430.0M
- Q4 FY2025: $14.94B
- Q1 FY2026: $-18.17B
- Q2 FY2026: $-8.82B
Why it matters for investors
Profit quality. Operating profit and margins are rising, which supports the improvement story. But the net income figure is inflated relative to operations, so the trailing price-to-earnings (P/E) ratio of 19.68 looks lower than it would on operating profit alone. P/E compares the share price to a year of earnings. Price to free cash flow is -230.11, a negative number because free cash flow over the trailing twelve months was negative. That ratio is not meaningful for comparison.
The spending bet. Cash is going into capacity, mainly for cloud and AI. A recent 247wallst.com headline said AWS has already sold "a good chunk" of its 2028 capacity. That points to demand but is not a company disclosure we can verify. Another headline said Amazon walked away from a data center plan after neighbors pushed back. Together they show that building capacity is both the opportunity and a practical constraint.
Balance sheet. As of June 30, 2026, Amazon held $122.99B in cash and short-term investments against $223.23B in total debt. FMP reports net debt of $145.02B, which uses a narrower cash measure than the cash and short-term investments figure above, so the numbers will not reconcile by simple subtraction. Shareholders' equity was $551.62B. Debt-to-equity is 0.40. Financial strength scores are middling to solid: a Piotroski score of 6 (on a 0-9 scale of financial health) and an Altman Z of 4.64, a score where higher numbers signal lower bankruptcy risk.
Peers. Amazon's trailing P/E of 19.68 and net margin of 17.4% compare with these peers:
| Company | P/E (trailing) | Net margin | |---|---|---| | Amazon (AMZN) | 19.68 | 17.4% | | eBay (EBAY) | 24.58 | 18.5% | | Alibaba (BABA) | 21.46 | 7.0% | | Global-e Online (GLBE) | 45.71 | 13.9% | | Coupang (CPNG) | -32.01 | -2.2% |
Coupang's negative P/E reflects losses. Amazon's P/E sits below eBay, Alibaba and Global-e, but its net margin is flattered by the large Q2 net income.
Analysts. Of 94 ratings, 84 are buy, 9 are hold and 1 is sell, for a consensus of "Buy." The average price target is 328.90 USD and the median is 325.00 USD. The range runs from a low of 200.00 USD to a high of 390.00 USD, and the targets are mostly above the recent price. Recent maintained ratings include Morgan Stanley (Oct. 19, 2026), Cantor Fitzgerald and Wells Fargo (both Oct. 12, 2026). These are analysts' views, not ours.
Our MoonshotScore. Stock Expert AI's MoonshotScore V2 for Amazon is 74.8, rated Strong. Compared with other companies in its sector, quality scores 80, momentum 78, safety 76 and growth 63. Valuation scores 32, the weakest pillar, meaning the stock looks less cheap against sector peers.
What could go wrong.
- Negative free cash flow in the last two reported quarters means spending exceeded operating cash flow, so it had to be covered from the balance sheet.
- The headline profit depends on a non-operating item that may not repeat.
- Among the 30 most recent insider filings, those dated in the last 90 days show 0 open-market purchases and 12 sales (older filings may be missing). Insider sales are common and not a signal by themselves.
- FMP's discounted cash flow model, an automated estimate of intrinsic value, shows 50.86 USD per share as of Oct. 24, 2026. That is far below the market price. Such models are very sensitive to their assumptions, and heavy spending that has not yet paid off in cash may reflect part of the gap here. Treat it as a caution, not a verdict.
What to watch next
- Oct. 29, 2026 earnings: analysts expect EPS of 1.96 and revenue of $202.16B. The EPS estimate of 1.96 is far below last quarter's reported 5.75, consistent with analysts not expecting the large non-operating boost to recur.
- Free cash flow: whether it turns positive or the gap between operating cash and capital spending stays wide.
- Operating margin: whether it extends its rise from the 9.7% low of the September 2025 quarter.
- AWS and advertising growth: these lines drive the margin story.
- Longer-term expectations: for the period ending March 30, 2028, analysts estimate revenue of $249.13B and EPS of 4.84. For the period ending June 30, 2028, they estimate revenue of $272.69B and EPS of 5.57 (13 analysts each).
Frequently asked questions
Q: When does Amazon report earnings next?
Amazon is scheduled to report on Oct. 29, 2026. Analysts expect EPS of 1.96 and revenue of $202.16B for the quarter.
Q: Did Amazon beat earnings expectations last quarter?
Yes. For the second quarter ended June 30, 2026, EPS was 5.75 versus an estimate of 1.82, and revenue was $200.61B versus an estimate of $197.03B. Net income was much larger than operating income, which suggests a non-operating gain boosted the result, so operating income of $27.46B is the cleaner measure of the core business.
Q: Is Amazon generating free cash flow?
Not recently. Free cash flow was $-8.82B in the quarter ended June 30, 2026, and $-18.17B in the quarter ended March 31, 2026. Operating cash flow was strong at $45.39B in the June quarter, but capital expenditure of $-54.21B exceeded it.
This is educational content, not investment advice. Past performance does not guarantee future results.