--- title: "Cloud Business Drives Amazon Q1 Revenue Acceleration; AWS Revenue Growth Hits Two-Year High; Capital Expenditure Exceeds Expectations" type: "News" locale: "en" url: "https://longbridge.com/en/news/284657135.md" description: "Amazon's Q1 revenue grew 17% year-over-year, beating expectations, with operating margin rising to a new high of over 13%. Net profit surged 77%, boosted by a $16.8 billion pre-tax gain from its investment in Anthropic, which accounted for more than half of net income. AWS revenue rose 28% year-over-year. Property and equipment expenditures over the past 12 months increased 160% year-over-year, while free cash flow dropped 95%, highlighting pressure from AI investments. Q2 revenue guidance significantly exceeded expectations, with the midpoint implying over 17% year-over-year growth, supported by Prime Day in the quarter; profit guidance midpoint was slightly below expectations. During the conference call, it was announced that this year's Prime Day would be moved up one month to June. The stock initially fell nearly 4% in after-hours trading before turning positive, rising as much as 5%" datetime: "2026-04-29T22:29:34.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/284657135.md) - [en](https://longbridge.com/en/news/284657135.md) - [zh-HK](https://longbridge.com/zh-HK/news/284657135.md) --- # Cloud Business Drives Amazon Q1 Revenue Acceleration; AWS Revenue Growth Hits Two-Year High; Capital Expenditure Exceeds Expectations Amazon delivered a robust first-quarter financial report with strong sales and earnings growth, but surging costs from heavy AI investments have reignited investor concerns about the company's profitability and consumer demand. Amazon's Q1 revenue exceeded analyst expectations by 2.4%; earnings per share (EPS) of $2.82 beat market estimates by 7.2%, representing year-over-year increases of 17% and 74%, respectively. Operating profit rose approximately 30% year-over-year, and the overall operating margin improved from 11.8% in the same period last year to a record 13.1%. The sharp increase in profits was partly driven by gains from its investment in Anthropic, a rival of OpenAI, with related pre-tax gains accounting for more than half of the quarter's net profit. Revenue from Amazon Web Services (AWS), the company's most closely watched cloud computing segment, grew 28% year-over-year, marking the highest quarterly growth rate in nearly four years. AWS revenue exceeded analyst expectations by nearly 2.5%. AWS remains Amazon's core profit driver, contributing nearly 60% of the company's operating profit in the first quarter. Amazon's guidance for the second quarter was also strong. The midpoint of expected net sales for Q2 is $196.5 billion, nearly 3.9% higher than analyst expectations. The low end of the operating profit guidance range represents a 4.2% year-over-year increase compared to the same period last year, while the high end implies a 25% year-over-year increase. Amazon also indicated that Prime Day will take place in the second quarter, which will support Q2 revenue. Following the earnings release, Amazon shares, which had closed up about 1.3% on Wednesday, initially turned lower in after-hours trading, dropping nearly 4%. They then reversed course during the earnings call, rising as much as 5%. Analysts suggest that the initial after-hours decline does not mean the market denied the quality of the earnings growth. Instead, investors focused on more sensitive metrics such as cash flow and capital expenditure. In the first quarter, Amazon's spending on property and equipment reached $44.203 billion, exceeding market expectations. Over the 12 months ending in the quarter, such expenditures totaled $151 billion, a 160% year-over-year increase. Free cash flow over the past 12 months plummeted 95% year-over-year to $1.232 billion, almost entirely consumed by AI infrastructure investments. Initial investor concerns centered on AI capital expenditures significantly exceeding expectations, squeezed free cash flow, and EPS being inflated by investment gains from Anthropic. The focus then shifted to the re-acceleration of AWS, strong Q2 revenue guidance, and the short-term growth certainty brought by the earlier timing of Prime Day. During the earnings call, Amazon confirmed that the Prime Day membership event would be moved up from July to June. ## Revenue and Profit Beat Expectations with Double-Digit Growth; Net Profit Amplified by Anthropic Investment Gains Amazon's total revenue in the first quarter was $181.519 billion, higher than the analyst expectation of $177.23 billion. Quarterly revenue grew 17% year-over-year, outpacing the 14% growth in the fourth quarter. Excluding the positive $2.9 billion impact from foreign exchange rates, Q1 revenue grew 15% year-over-year. From a revenue structure perspective, service revenue grew faster. Net service sales in the first quarter were $110.215 billion, a year-over-year increase of approximately 20%, higher than the roughly 12% growth in product sales, continuing to shift the revenue mix toward higher-margin businesses. On the profit side, Amazon's Q1 operating profit rose 30% year-over-year to $23.852 billion, beating the analyst expectation of $20.75 billion. This marks a significant acceleration from the 17.9% growth in the fourth quarter, indicating that the company still has operating leverage to release across retail fulfillment, advertising, and cloud business lines. Total operating expenses in the first quarter were $157.667 billion, a year-over-year increase of approximately 15%, which was lower than the revenue growth rate. Sales and marketing expenses grew only about 6%, while general and administrative expenses declined slightly. However, the substantial growth in net profit requires a closer look. Q1 net profit was $30.255 billion, a 77% year-over-year increase. Amazon disclosed that this included a $16.8 billion pre-tax non-operating gain from its investment in Anthropic. This $16.8 billion accounted for more than half of the net profit. In other words, the "stunning" performance in GAAP net profit and EPS was largely driven by fair value gains from investments, rather than solely from improvements in core business operations. Consequently, the market is paying more attention to operating profit, AWS growth, and cash flow, rather than just the EPS beat. ## AWS: AI Demand Drives Accelerating Growth, but Capital Intensity Rises Simultaneously AWS was the biggest positive highlight of the Q1 earnings report. The segment's revenue for the quarter was $37.587 billion, a 28% year-over-year increase, marking the highest quarterly growth rate since the second quarter of 2022. This represents a significant acceleration from the 17% growth in the same period last year and also exceeded the market expectation of $36.68 billion. Over the past few quarters, AWS revenue growth has steadily risen from 17% to 20%, 24%, and now 28%, indicating that enterprise cloud spending and AI-related demand are once again driving Amazon's cloud business. AWS operating profit in the first quarter was $14.161 billion, a 23% year-over-year increase. The operating margin was 37.7%, an improvement from 35.0% in the previous quarter, but lower than 39.5% in the same period last year. This reflects two trends: on one hand, AWS remains highly profitable; on the other, investments in AI computing power, chips, data centers, and depreciation costs are putting pressure on margins. Company management emphasized that AWS is in an AI infrastructure expansion cycle. Amazon's custom chip business has an annualized revenue run rate exceeding $20 billion and maintains triple-digit year-over-year growth. Over the past 12 months, more than 2.1 million AI chips have been deployed, with more than half being Trainium chips. The company also disclosed that OpenAI has committed to using approximately 2GW of Trainium computing power through AWS infrastructure, and Anthropic will access up to 5GW of Trainium chip resources. These orders and customer commitments strengthen the visibility of AWS's future growth and explain the surge in capital expenditures. However, for investors, the key question becomes: when will such large-scale AI investments translate into sufficiently high cash returns? ## North America Retail: Scale Growth and Efficiency Improvements Materialize Simultaneously North America segment revenue in the first quarter was $104.143 billion, a 12% year-over-year increase. Operating profit was $8.267 billion, up 42% year-over-year, with the operating margin rising from 6.3% in the same period last year to 7.9%. This is an important signal of improvement in Amazon's retail foundation. The company disclosed that the global number of paid units shipped grew 15% year-over-year, the highest growth rate since the end of the pandemic lockdown phase. Meanwhile, online store revenue was $64.254 billion, up 12% year-over-year, and third-party seller services revenue was $41.578 billion, up 14% year-over-year. This indicates that e-commerce demand on Amazon has not significantly weakened, and platform-based revenue continues to grow faster than first-party product sales. However, fulfillment and delivery costs are still rising. Global transportation costs were $25.709 billion, a 14% year-over-year increase, close to the growth rate of paid units shipped. Amazon continues to push for faster delivery, including offering 1-hour and 3-hour delivery for over 90,000 products in the US, and expanding ultra-fast delivery services like Amazon Now. Faster delivery helps enhance user stickiness and order frequency, but it also means the logistics network requires continuous investment. ## International Business: Profitability Continues to Improve, but Foreign Exchange Contribution is Significant International segment revenue in the first quarter was $39.789 billion, a 19% year-over-year increase. However, excluding the impact of foreign exchange rates, the year-over-year growth was 11%. This means that foreign exchange rates made a significant positive contribution to the high growth of the overseas business. On the profit side, international segment operating profit was $1.424 billion, higher than $1.017 billion in the same period last year. The operating margin rose from 3.0% to 3.6%. However, the company disclosed that foreign exchange rates had a positive impact of approximately $347 million on international segment operating profit. Excluding foreign exchange effects, the year-over-year increase in operating profit was only about 6%. This indicates that the profitability of the international business is indeed improving, but the magnitude of improvement is not as strong as the headline figures suggest. Compared to the past many years where overseas operations dragged down profits, Amazon's international business has now entered a stage of sustained profitability, which remains a positive signal in the earnings report. ## Advertising and Subscriptions: High-Margin Service Revenue Continues to Expand The advertising business remains a crucial support for Amazon's profit structure. Advertising services revenue in the first quarter was $17.243 billion, a 24% year-over-year increase. Excluding the impact of foreign exchange rates, growth was 22%. The company stated that advertising revenue over the past 12 months has exceeded $70 billion. Amazon's advertising advantage stems from retail search, shopping data, Prime Video, and partnerships with external platforms. This quarter, the company mentioned that advertisers can use Amazon Audiences in Netflix ad campaigns to reach target users using Amazon's shopping, streaming, and browsing signals. Brand prompts in the AI shopping assistant Rufus and Sponsored Products are also expanding advertising monetization opportunities. Subscription services revenue was $13.427 billion, a 15% year-over-year increase, including non-AWS subscription businesses such as Prime membership, video, music, and e-books. The continued growth of advertising and subscriptions has further increased the proportion of Amazon's service revenue, providing a buffer for overall profit margins. ## Q2 Guidance: Revenue Significantly Beats Expectations; Profit Guidance Midpoint Slightly Below Expectations Amazon expects Q2 net sales to be between $194 billion and $199 billion, a year-over-year increase of 16% to 19%. The midpoint of $196.5 billion is significantly higher than the market expectation midpoint of $189.15 billion. Calculated at the guidance midpoint, Amazon expects Q2 revenue to grow 17.2% year-over-year, a fairly strong growth rate. However, it is important to note that the company assumes Prime Day will occur in the second quarter, so part of the incremental growth comes from changes in promotional timing. Operating profit guidance is between $20 billion and $24 billion, compared to $19.2 billion in the same period last year. Looking only at the upper end of the range, it is indeed higher than the market expectation of $22.86 billion. However, calculated at the midpoint, it is $22 billion, which is below that expectation. Therefore, the profit guidance does not constitute a clear "beat" like the revenue guidance. This is also one of the reasons for the pressure on the stock price in after-hours trading: investors see strong revenue elasticity, but also recognize that more revenue may be absorbed by AI infrastructure, logistics acceleration, depreciation, and operational investments. 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