TLDR
- Piper Sandler raised Amazon’s price target to $320 from $315.
- Amazon Q2 net sales rose 20% year over year to $200.6B.
- AWS revenue jumped 36.7% to $42.2B during the quarter.
- AWS operating income rose to $16.6B from $10.2B a year earlier.
- Amazon raised its 2026 capital spending forecast to about $220B.
Piper Sandler raised its Amazon price target to $320 from $315 after the company reported strong second-quarter results, led by faster AWS growth, higher operating income, and stronger cloud margins.
Amazon stock rose after revenue crossed $200 billion and AWS posted its fastest growth in 18 quarters. The results helped ease concerns over rising AI infrastructure spending, even as Amazon lifted its 2026 capital expenditure forecast to about $220 billion.
Piper Sandler Cites Strong AWS Growth
Piper Sandler kept an Overweight rating on Amazon after reviewing the company’s second-quarter report. The firm said the quarter was one of Amazon’s strongest, supported by cloud growth and better margins.
AWS revenue increased 36.7% year over year to $42.2 billion. The result came above market expectations near $40.5 billion and marked a sharp acceleration from the first quarter.
AWS operating income rose to $16.6 billion from $10.2 billion a year earlier. The segment generated about 60% of Amazon’s total operating income, despite representing nearly 21% of company revenue.
Amazon Chief Executive Andy Jassy said, “AWS is booming, growing 36.7% year-over-year in Q2.” The cloud unit’s annualized revenue run rate reached about $169 billion.
Piper said the higher 2026 capital spending plan remains manageable because business momentum remains strong. Amazon increased its expected 2026 capex to roughly $220 billion from a prior estimate of $200 billion.
Amazon Revenue Tops $200 Billion
Amazon reported second-quarter net sales of $200.6 billion, up 20% from $167.7 billion a year earlier. The figure beat Wall Street estimates near $196.5 billion.
North America sales rose 16% to $116.2 billion, while international sales increased 15% to $42.2 billion. Operating income increased 43% to $27.5 billion.
Advertising revenue grew 26% to $19.8 billion, adding another high-margin growth source outside AWS. Amazon also reported faster Prime deliveries, with more same-day and overnight shipments during the first half of the year.
The company’s reported net income reached $62.6 billion, or $5.75 per diluted share. That figure included a $53.4 billion pre-tax gain mainly tied to Amazon’s Anthropic investment.
Operating income gave investors a clearer view of Amazon’s core business performance. The rise from $19.2 billion last year showed stronger earnings power across cloud, retail, and advertising.
AI Spending Remains Key Focus for AMZN Stock
Amazon’s AI spending remains a central issue for investors. The company spent $54.2 billion on capital projects during the quarter, above expectations near $49.4 billion.
Trailing free cash flow fell to negative $7.6 billion from positive $18.2 billion a year earlier. Amazon linked the decline mainly to higher property and equipment purchases tied to AI infrastructure.
Jassy told analysts AWS could “very possibly be a trillion-dollar annual revenue business for us in time.” He also said Amazon may not
“have enough capacity to meet all the demand we have in 2026.”
Amazon’s AI cloud business and custom-chip operations each passed a $25 billion annualized revenue run rate. Trainium chips, Graviton processors, and Bedrock remain key parts of the company’s AI infrastructure strategy.
Amazon expects third-quarter revenue between $197 billion and $202 billion. Operating income is projected between $22.5 billion and $26.5 billion, up from $17.4 billion last year.
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