Amazon Web Services revenue rose 37% year on year to $42.2 billion in the quarter ended June 30, the company said, marking its fastest growth in 18 quarters. AWS operating income increased to $16.6 billion from $10.2 billion a year earlier.
The cloud division reached a $169 billion annualised revenue run rate, while Amazon said its AI business and chips business each exceeded $25 billion in annualised revenue. Chief Executive Officer Andy Jassy said demand remained strong enough that Amazon still faced computing-capacity constraints.
Amazon's overall second-quarter net sales increased 20% to $200.6 billion, while operating income rose 43% to $27.5 billion. Net income reached $62.6 billion, although the figure included $53.4 billion of non-operating pre-tax income, primarily from Amazon's investments in Anthropic.
The growth has come as Amazon increases spending on data centres and other infrastructure needed to support AI workloads. Amazon said purchases of property and equipment, net of proceeds from sales and incentives, increased by $66.1 billion over the previous year, primarily reflecting AI investments.
Amazon raised its full-year 2026 capital spending forecast to $220 billion, according to Reuters, as the company seeks to expand capacity for customers using AI and cloud services. The company said even that level of spending would not provide enough capacity to meet all demand during 2026.
The spending is supported by a large AWS contract backlog. Reuters reported that AWS's backlog rose to $496 billion at the end of the second quarter from $364 billion three months earlier, giving Amazon visibility into future cloud demand.
Amazon has also used partnerships with AI companies to expand AWS's role in the AI infrastructure market. In November 2025, AWS and OpenAI announced a multiyear agreement under which OpenAI committed $38 billion to use AWS computing infrastructure, including hundreds of thousands of Nvidia GPUs.
The OpenAI agreement was designed to expand computing capacity through 2026 and beyond. AWS said the arrangement could scale to tens of millions of CPUs, while the initial capacity was targeted for deployment before the end of 2026.
Amazon has also invested in AI infrastructure for government customers. The company announced an investment of up to $50 billion to expand AWS artificial intelligence and high-performance computing capacity for US government agencies, with nearly 1.3 gigawatts of additional capacity planned.
The company's AI strategy extends beyond cloud infrastructure. Amazon has developed its own chips, including Trainium and Inferentia, and said its chips business had crossed a $25 billion annualised revenue run rate in the second quarter. The company also operates Amazon Bedrock, which gives developers access to generative AI models and services.
Amazon's wider business continues to depend heavily on retail, but AWS has become a major source of profitability and an increasingly important driver of growth. The company reported $116.2 billion in North America sales and $42.2 billion in international sales during the second quarter, compared with $42.2 billion from AWS.
The expansion also carries financial pressure. Amazon's trailing 12-month free cash flow turned negative at $7.6 billion in the second quarter, compared with positive free cash flow of $18.2 billion a year earlier, as capital expenditure increased sharply.
Amazon expects third-quarter net sales of between $197 billion and $202 billion and operating income of between $22.5 billion and $26.5 billion. The next quarterly results will show whether AWS growth and AI demand continue to support the company's higher infrastructure spending.
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