Amazon's second quarter did two contradictory things at once, and both are real. AWS posted its fastest growth in eighteen quarters - 37% year over year to $42.2 billion - and lifted its operating margin to 39.4%, a 650-basis-point gain. That is the most consequential single piece of operating data in the company's most recent quarterly report, and the company framed it that way. Andy Jassy, in the company's announcement, called it the company's fastest AWS growth in 18 quarters and said the AI and Chips businesses each crossed $25 billion in annual revenue run rate. Then, in the same quarter, a single non-cash accounting line - the mark-up of Amazon's preferred-stock stake in Anthropic - added $50.5 billion to other income, accounting for 95% of the quarter's $53.4 billion Other income/expense line and 62% of pre-tax income, and turning a 43% operating-income jump into a 245% net-income print. Diluted GAAP EPS of $5.75 was 3.4x the year-ago quarter; on a clean ex-Anthropic basis it would have been roughly $2.16, up 29% from the year-ago $1.68 and in line with the operating run-rate.
The market saw through the noise. The stock closed $226.65 the day before the release, $235.50 on the earnings day, and $271.58 the day the second-quarter 10-Q was filed - a 19.8% move in two sessions, the largest single reaction to an Amazon print in years. The driver was not the $50 billion non-cash gain. The driver was the AWS print, the AI capex build, the Anthropic and OpenAI multi-gigawatt expansions, and the disclosure that trailing-twelve-month free cash flow had just flipped to a $7.6 billion outflow on a $66 billion year-over-year jump in capex. The market priced the AI buildout, the capex inflation, and the AWS acceleration all at once. This report reads the quarter the same way: the operating business is the engine, the Anthropic accounting is a quarterly noise the company itself does not treat as recurring, and the FCF flip is the single largest fact that has changed since the prior report.
Two other numbers frame the quarter. Advertising grew 26% in the quarter to $19.8 billion - a $4.1 billion year-over-year increase that more than funds the entire North America segment's operating income growth (and the segment grew 16% to $116.2 billion, with $640 million in tariff refunds helping the cost line). The retail engine is healthy; advertising is paying for it. And on the balance sheet, long-term debt face value nearly doubled from $68.8 billion at year-end to $133.0 billion at June 30, 2026 - a $64 billion move in six months - with the company disclosing an additional $25 billion of notes issued after quarter-end, plus a $17.5 billion delayed-draw term loan entered in June 2026. Amazon is using cheap debt to fund the AI capex, and the $496 billion of remaining AWS performance obligations and $200 billion+ of new AI-cloud commitments (OpenAI $100 billion-plus, Anthropic $100 billion-plus) show where that debt is going.