AWS accounted for 60% of total revenue, Amazon delivered a Q2 without any weaknesses

On July 30th, US time, Amazon released its second-quarter performance. The total revenue reached $200.6 billion, with a year-over-year growth according to the company's press release. Retail, third-party seller services, advertising, and cloud computing are all moving forward, and the overall performance seems solid.

What catches the eye the most is the net income, which reached $62.6 billion, while the operating profit for the same period was only $27.5 billion. According to Amazon, the variance between the two is not from some sudden new business explosion but rather from a significant investment-related income at the bottom of the income statement.

This income makes the financial report read like a profit sprint but also brings the real question worth looking at to the forefront. What exactly is Amazon making money from this quarter, and how much of that money is still on the balance sheet?

$62.6 Billion Income – Where Does It Come From?

According to Amazon's consolidated statement of income, the operating profit is the result of the combined operations of the retail, advertising, AWS, and other businesses. Below the operating profit line, there are interest and other income, with the most significant being $53.4 billion of non-operating pre-tax other income. The company only provided a single-layer disclosure in the press release, stating that it primarily comes from the investment in the large-scale company Anthropic.

This chart aims to correct not the numbers themselves but the way they are read. The $53.4 billion is not from additional cloud services sold by AWS that quarter or cost savings from retail operations. It occurs after the operating profit and belongs to non-operating projects related to investments.

This also explains why it cannot be simply subtracted from net income, followed by an announcement of "net income excluding Anthropic." This income is pre-tax, and Amazon did not separately disclose its tax implications. Instead of a backward deduction, a more prudent operational measure is the $27.5 billion operating profit, which is directly linked to the performance of each segment.

Why AWS Can Sustain the Operating Profit

Setting investment-related income aside, the acceleration of the cloud computing business AWS remains remarkable. Recalculating the revenue disclosed in the financial statements, AWS grew by 36.8% year over year this quarter.

According to the same financial report, AWS's operating profit reached $16.6 billion, nearly two-thirds higher than the same period last year.

Based on the profits reported for the North America, International, and AWS segments, in the latest quarter, AWS alone contributed 60.5% of the company's operating profit.

The transformation shown in the chart is more intuitive than a simple income statement. While Amazon's largest revenue plate still comes from North America retail, the blue segment has always been a crucial support wall for the profit statement, and the absolute profit in the latest quarter has risen again. The international business remains profitable, and the North American business is also improving, alleviating some of the pressure on AWS. However, once the focus shifts to profit rather than revenue, the importance of AWS becomes hard to ignore.

This is the most practical significance of the cloud business for Amazon. It not only provides a higher-growth segment for the AI narrative but also allows for a thicker operational buffer for the retail network, delivery capabilities, and data centers.

Why Hasn't the Earned Money Stayed in Free Cash Flow

A thickening operating profit does not mean that cash will settle in proportion. Another table in Amazon's press release discusses the destination of funds over the past 12 months, rather than just the expenses of a single quarter.

As of the past 12 months ending in the second quarter of 2026, according to the company's press release, Amazon's operating cash flow was $161.4 billion, and property and equipment net purchases were $169 billion. The two TTM lines intersected at this point, and TTM free cash flow also turned negative.

Here, "property and equipment net purchases" are not just an abstract capital expenditure. It includes investments in data centers, servers, and other long-term assets, net of proceeds from sales and adjusted for incentives. The company stated that the year-over-year increase in this expense primarily reflects investment in AI. Saying it's all about AI would narrow the financial report.

This contrast also makes the $62.6 billion appear more nuanced. Investment income on the income statement boosts net profit, while infrastructure investment in the cash flow statement is rapidly eroding the cash generated from operating activities. Both can be true simultaneously but answer two completely different questions.

Besides AWS, the Chassis Is Also Accelerating

If you only focus on AWS, it's easy to portray Amazon as a cloud computing company. According to the company's revenue breakdown table, AWS's year-over-year growth rate has increased from 17.5% to 36.8%.

As per the same revenue breakdown table, the advertising services' growth rate for this quarter is still at 26.2%. Third-party seller services and the online store, while not running as fast as AWS, are both gaining speed compared to a year ago. Together, they determine whether the retail base can continue to bear the costs of delivery, fulfillment, and user acquisition.

The blue pillar of AWS, equipment investment in the non-operating pre-tax other income and cash flow statement mainly driven by Anthropic investment, happened to be featured in the same quarterly report.