Amazon reported a $496 billion backlog of signed contracts on its fiscal Q2 2026 call, a figure management said had at least doubled from a year earlier. Most of its AI capacity is contracted for at least five-year terms, and Anthropic and OpenAI have made multi-year commitments to its Trainium chips, yet management said Amazon will not have enough capacity to meet demand in 2026 or 2027. AWS generated $129 billion in fiscal 2025, or 18.0% of Amazon's $717 billion in sales, growing 19.7%, and now runs at a $169 billion annual pace. Management expects about $220 billion in 2026 capex, up from about $200 billion, due to higher memory costs, while free cash flow over the last twelve months was negative $11.6 billion. Amazon stock returned 22.4% over the year through October 19, 2026, versus 17.4% for the S&P 500, but closed 7.6% below its highest close of the past year.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
Amazoncloud computingartificial intelligencecapital expenditure
Open a keyword to see other news on the same topic.
Related tickers and likely impact
AMZN
▲ Likely positiveAmazon
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Consumer Discretionary |
| Industry | Broadline Retail |
| Market cap | $2.7T |
| Close on 10/19/2026 | 262.45 |
| Change that session | +4.98% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Is Amazon Stock Poised to Gain as AI Boosts Cash Flow Prospects?
Amazon is turning its AI investments into revenue-generating products: AWS previewed new agent tools, and Bedrock added Claude Haiku 5.5 at roughly 75% lower cost than its predecessor. In Q2 2026, AWS's AI business and Amazon's Trainium and Graviton chip business each crossed a $25 billion annual revenue run rate, growing at triple-digit percentages, backed by multi-year commitments from Anthropic and OpenAI. AWS sales rose 37% to $42.2 billion in Q2, and its segment operating margin widened to 39.4% from 32.9%. However, Amazon raised its 2026 cash capex outlook to about $220 billion from $200 billion on higher memory costs, pushing trailing-12-month free cash flow to a $7.6 billion outflow, and expects capacity to fall short of demand through 2027. Microsoft and Alphabet face similar trade-offs, with Microsoft's free cash flow down 23% and Alphabet posting a negative $5.9 billion quarterly free cash flow.
- 2 "Magnificent Seven" Stocks to Buy and Hold for the Rest of the Decade
The author would buy Alphabet (GOOGL, GOOG) and Amazon (AMZN) to hold for the rest of the decade, arguing the largest cloud providers will be best positioned as AI infrastructure matures. Amazon signs five-year or longer contracts with payback within two to three years, while Alphabet’s payback is around two years, and about half that when using its own TPUs. If demand slows, both can cut AI capex, generate large free cash flow, and pay down debt or buy back stock, and their custom chips may deliver better returns than providers relying on Nvidia GPUs. The article also cites Alphabet’s search leadership and Gemini features such as AI Overviews and AI Mode, and Amazon’s position as the largest e-commerce provider with strong robotics and AI-driven efficiencies.
- 2 Tech Stocks to Buy Now and Hold for a Decade (Hint: 1 Isn't in the AI Trade)
The article compares Amazon (AMZN), where AWS is the AI-driven growth engine, with Sea Limited (SE), which is not an AI company. Amazon posted $382 billion in first-half 2026 net sales, up 18%, while AWS, at 21% of revenue, delivers most operating income. Its $92 billion profit was boosted by $69 billion in investment gains, free cash flow was an outflow of $7.6 billion over the trailing 12 months, and it has pledged $220 billion in capex. Sea Limited's first-half revenue rose 47% to $14.9 billion and net income grew 9% to $896 million as it invested in operations; it spent about $793 million on capex, generated $4.9 billion in free cash flow over 12 months, and trades at 37 times earnings. The author argues both can drive long-term growth, with Amazon worth patience and Sea Limited arguably worth considering.
- Nancy Pelosi and Trump Like This Top AI Stock
Amazon (AMZN) can profit from AI whichever lab wins, since AWS sells computing power to all of them, including Anthropic and OpenAI. AWS revenue grew 37% in the second quarter, its fastest pace in years. Big investors have been buying: Stanley Druckenmiller's Duquesne Family Office raised its Amazon stake by 1,083%, while Arrowstreet Capital is the largest holder with about 40.3 million shares worth $9.62 billion. On the bear side, trailing 12-month free cash flow has turned negative due to heavy AI data center spending, second-quarter profit included a large one-time gain on the Anthropic stake, and AWS could still lose share to Microsoft and Google.
- Alphabet's Cloud Surge and AI Dominance Overshadow Capex Fears and Keep Me Buying
The author keeps buying Alphabet (GOOGL) because Google Cloud revenue accelerated each quarter, from 34% growth in Q3 2025 to 82% in Q2 2026, reaching $24.77 billion. Q2 revenue rose 24.23% to $119.80 billion, and operating income climbed 30.38% to $40.77 billion; the author tracks this figure rather than the $9.11 EPS, which was inflated by equity securities gains. The risks cited are capex rising 100.14% to $44.92 billion, which pushed free cash flow to negative $5.86 billion, long-term debt rising to $98.2 billion, and the suspension of buybacks. The author argues demand is still visible in operating cash flow, up 40.8% to $39.07 billion, and in a cloud backlog that nearly doubled to over $460 billion.
- From Search Destruction to Efficiency, I Have Faith in Alphabet’s Abilities
The author remains confident in Alphabet, as Search & other revenue reached $63.27 billion in Q2 2026, up 17%, and Google Cloud grew 82% to $24.77 billion. Operating margin reached 34%, and the stock is valued at about 15 times earnings, while the company spent $44.92 billion on capex in a single quarter. The biggest risk, in the author's view, is capex: Alphabet guided to $175 billion to $185 billion for 2026, Q2 free cash flow was negative $5.86 billion, long-term debt rose from $46.5 billion to $98.2 billion, and buybacks were suspended. Q2 operating cash flow reached $39.07 billion, and the author sets aside a $99.03 billion unrealized gain that lifted reported net income. The author will track whether the backlog of over $460 billion turns into revenue and whether the spending produces returns.
Related markets
Latest news
- Meta ordered to pay $25 billion penalty in New Mexico Cambridge Analytica case
A New Mexico court ordered Meta to pay $25 billion in penalties in a data privacy case tied to the Cambridge Analytica scandal. A Santa Fe jury found in September that Meta misled state residents about how it collects and protects user data and curbs harmful content, with more than 43 million violations of the state's unfair practices act. Judge Francis Mathew applied the highest allowed penalty of $5,000 per violation; the filing shows the state was initially awarded $219.5 billion, but the penalty was reduced to $25 billion, and interest of 15% a year will accrue until it is paid in full. Earlier, Meta settled many Cambridge Analytica-related privacy suits in a nearly $17 billion August deal with a coalition of state attorneys general over child safety and mental health, but New Mexico did not take part and proceeded to trial.
- Billionaire Warren Buffett's Warning Before the Dot-Com Crash Offers a Lesson for Today's Investors
The article recalls advice Warren Buffett gave more than 25 years ago on how investors can prepare for a possible stock market crash, which it argues could be especially relevant today. It notes that Buffett, 96, stepped down as chairman of Berkshire Hathaway in September after more than five decades in the role.
- Bitcoin Hits Weekly High as Crypto Market Rebounds
Bitcoin traded near $84,500, up 2.5% over 24 hours, as the crypto market rebounded from a mid-October slide that had pushed it below $80,000. Ethereum rose 2.5% to $2,504, XRP gained 4.1%, and Zcash jumped 11.2%. The article links October's selloff to Brent crude near $108 and a 5.09% 10-year Treasury yield, and notes that U.S. consumer prices rose 3.7% year over year in September, with markets firmly expecting a Fed rate hike on Dec. 9. On the chart, Bitcoin is approaching resistance at $87,422.70, with support at $81,603. On the Myriad prediction market, traders put the odds of Bitcoin touching $87,500 in October at 31%.
- Meta earnings live: Meta Q3 earnings to test Wall Street's stomach for AI spending
Meta (META) will kick off Big Tech's earnings season with third-quarter results after the bell on Wednesday. Bloomberg analyst consensus expects earnings per share of $3.56 on revenue of $63.3 billion, compared with $1.05 and $51.2 billion a year earlier. Capital expenditures are projected to rise 117% year over year to $41 billion, and Reality Labs is expected to post an operating loss of $5.2 billion.
- What would happen if SpaceX and Tesla merged?
According to the article, a merger of SpaceX and Tesla would create a company with a market value of $3,500 billion and strengthen Elon Musk's control over Tesla. On October 20, Musk said both companies had set up special committees to discuss a possible merger at shareholders' request, calling it “a good idea.” Supporters argue a combined company could collaborate on AI software, chip design, robotics, space launches and internet connectivity, simplify decision-making, and give shareholders of each company access to the other's businesses. The two firms already work together on Terafab, a project to produce advanced chips that Musk expects could start production from late 2028. The biggest hurdles are geopolitical and regulatory: SpaceX is a major contractor for the US Department of Defense, intelligence agencies and NASA, while Tesla's Shanghai factory ties it to China, so the merged firm could face closer scrutiny in both countries.
- How Nvidia's OpenShell is securing the next generation of AI agents: Jensen Huang
Nvidia CEO Jensen Huang, speaking at the company's GTC Berlin event on Wednesday, introduced the OpenShell platform to address risks from autonomous AI agents that can access files, resources, networks and tools. He argued that such agents should be given minimal privileges and monitored constantly, saying that simply asking agents not to misuse access is not real security. According to Huang, OpenShell runs each agent in an isolated sandbox, with every outbound network request checked against a policy by a supervisor outside the sandbox, and keeps access keys outside the agent so they are added only when sending to an approved endpoint. The platform checks policy changes against permission limits through formal verification and combines Linux kernel isolation with runtime policy enforcement.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.