Amazon second quarter 2026 earnings explained: segments, EPS and valuation multiples

Amazon reported its second quarter 2026 results on July 30, 2026. It has since reported its third quarter, on October 29, 2026, and a separate Dalsna Finance article covers those results. This article looks back at the three months ended June 30, 2026 and compares them with the first quarter. Net sales rose 10.5% and operating income rose 15.1% from the quarter before, while net income more than doubled to $62,647 million because of large gains on Amazon's investments in Anthropic (Dalsna Finance calculation for the changes). Every figure is sourced and dated, and every number worked out by us is labelled as a Dalsna Finance calculation. ^[1][2][3]

Amazon in brief

Amazon.com, Inc. is based in Seattle. It is best known for its online stores and its Prime membership, and it also sells cloud computing to businesses through Amazon Web Services, or AWS. Its shares trade on the Nasdaq under the ticker AMZN. Amazon had 1,595,000 full time and part time employees at June 30, 2026, not counting contractors and temporary staff, as reported in its release. ^[1][4]

The release lists highlights since the first quarter report. Amazon said the AI business inside AWS and its chips business each passed an annual revenue run rate of $25 billion. It said Zoox received approval from the National Highway Traffic Safety Administration to charge for rides, and that four more launches brought its Amazon Leo low Earth orbit network to nearly 400 satellites, which it said is enough to begin initial internet service this year. Chief executive Andy Jassy said AWS grew 36.7% from a year earlier, its fastest growth in 18 quarters, and ended by saying Amazon has much more on the way for customers in the second half of the year and after it. ^[1]

Three segments

Amazon reports three segments. North America is mainly made up of money earned from retail sales of consumer products, including sales by other sellers, and from advertising and subscription services through online and physical stores focused on North America. International is mainly made up of the same kinds of income earned through what Amazon calls internationally focused online stores. AWS earns its money selling cloud services such as computing power, data storage and databases to customers around the world, from young companies and large businesses to government bodies and universities. ^[4]

AWS earned most of the profit. Its net sales rose to $42,232 million from $37,587 million in the first quarter, and Amazon reported growth of 37% from a year earlier. It earned $16,621 million of operating income, about 60.5% of the company total (Dalsna Finance calculation: $16,621 million divided by $27,461 million), at an operating margin of 39.4% as reported. North America earned $9,123 million at a 7.9% margin and International $1,717 million at a 4.1% margin, both as reported. Amazon put AWS at a $169 billion annualized revenue run rate. ^[1]

Net sales by type

Amazon also splits its net sales by what it sells. Online stores, its own product sales and digital media, came to $70,432 million in the second quarter. Third party seller services, which include commissions, related fulfillment and shipping fees and other seller services, brought in $46,780 million. Advertising services were $19,809 million, up 26% from a year earlier excluding currency changes as reported, and subscription services, which include Amazon Prime membership fees and digital video, music and other subscriptions, were $13,730 million. ^[1]

Timing matters when reading these numbers. In its later third quarter release Amazon said Prime Day took place in the second quarter this year for most large countries, while in 2025 it fell entirely in the third quarter. The second quarter release did not put a figure on what Prime Day added to that quarter. ^[3][1]

The numbers, quarter over quarter

Net sales were $200,606 million in the second quarter, against $181,519 million in the first. Amazon does not report gross profit, but net sales minus its reported cost of sales rose 11.5% to $104,828 million. Operating income, which also takes off fulfillment, technology and infrastructure, marketing and administrative costs, rose to $27,461 million from $23,852 million. Net income under GAAP, the standard US accounting rules, rose to $62,647 million from $30,255 million (Dalsna Finance calculation for gross profit and the changes). ^[1][2]

Profit margin is net income as a share of net sales: 31.2% in the second quarter against 16.7% in the first (Dalsna Finance calculation: $62,647 million divided by $200,606 million, and $30,255 million divided by $181,519 million). The operating margin, operating income divided by net sales, was 13.7% against 13.1%, as reported. ^[1][2]

Most of the jump in net income came from below the operating line. Amazon said second quarter net income included $53.4 billion of non operating pre tax other income, primarily from its investments in Anthropic. The quarterly report says upward adjustments to equity investments in private companies came to $50.5 billion in the quarter and reflect observable price changes, mainly in its nonvoting preferred stock in Anthropic. First quarter net income included $16.8 billion of pre tax gains from the same investments, as Amazon reported then. The gains also lifted taxes: the quarterly report says the income tax provision for the first six months of 2026 included $15.9 billion of net discrete tax expense, mainly tied to those upward adjustments. ^[1][2][4]

Against the second quarter of 2025, net sales were up 19.6% from $167,702 million, which Amazon rounds to 20%, and net income was up 244.9% from $18,164 million (Dalsna Finance calculation). ^[1]

Earnings per share

Earnings per share, or EPS, is profit divided by the number of shares. The diluted figure also counts shares that could be created from stock awards. Amazon reported diluted EPS of $5.75 for the second quarter and $2.78 for the first. Dividing net income by the diluted share count gives the same figures. ^[1][2]

Amazon reports no adjusted net income and no adjusted EPS. Its own non GAAP measures include free cash flow, which it defines as cash from operations minus purchases of property and equipment, net of proceeds from sales and incentives, and reports for the trailing twelve months. Over the twelve months to June 30, 2026 operations brought in $161,403 million and net purchases of property and equipment were $169,007 million, an outflow of $7,604 million. That is down from an inflow of $18.2 billion for the twelve months to June 30, 2025. Amazon said the fall came primarily from a $66.1 billion year over year rise in those net purchases, a rise it said "primarily reflects investments in artificial intelligence." So this article uses trailing free cash flow as its second measure and calls it by that name. Per share, on the 10,786 million shares on the cover of the second quarter report, it was $0.11 at March 31 and an outflow of $0.70 at June 30 (Dalsna Finance calculation). It is a cash measure, not earnings. ^[1][4]

What the market values Amazon at

Market capitalization, or market cap, is what the stock market values the whole company at: the share price times the number of shares. Amazon's shares closed at $240.35 on Friday, October 30, 2026, as reported by StockAnalysis. The cover of its second quarter report to the SEC lists 10,786,313,572 shares of common stock outstanding as of July 22, 2026. That gives a market cap of about $2.59 trillion (Dalsna Finance calculation). Every multiple and share price below uses this one share count. ^[5][4]

Keep the timing in mind. The price is from the day after the third quarter results came out, so it reflects news that is not in this article. The earnings behind every multiple stop at June 30, 2026, as reported with the second quarter, and the share count is the one on that report's cover. The multiples below are therefore a late October price set against the second quarter's numbers, not a current valuation on the latest results. ^[5][3][4]

Six valuation multiples

The price to earnings ratio, or P/E, is market cap divided by a year of earnings. It shows how many dollars the market is paying for each dollar of yearly profit. Annualised means one quarter multiplied by four, so it assumes the second quarter's conditions lasted a full year. On that basis Amazon has a P/E of 10.3 (Dalsna Finance calculation: $2,592.5 billion divided by $62,647 million times 4, which is $250,588 million). That figure is low because the quarter's earnings include the large Anthropic gains described above, and annualising repeats them four times. ^[1][5][4]

The second measure divides market cap by free cash flow. We call it market cap to free cash flow, because free cash flow is not earnings. Amazon reports free cash flow only for twelve month periods. Worked out for the second quarter alone from its cash flow statement, it was an outflow of $7,689 million: $45,387 million of operating cash minus $54,208 million of purchases of property and equipment plus $1,132 million of proceeds and incentives (Dalsna Finance calculation). Annualised it stays an outflow, so the multiple is not meaningful, because dividing by a negative number says nothing about how expensive the shares are. ^[1]

A forward P/E uses an estimate of future earnings. IG reported on October 28, 2026, after the second quarter results and the day before the third quarter results, that the LSEG estimate for full year 2026 EPS is $13.00, which IG said is above the consensus mean. Multiplying that by the same 10,786 million shares gives estimated earnings of about $140,222 million and a forward P/E of 18.5 (Dalsna Finance calculation on an estimate, the LSEG estimate as reported by IG). The first two quarters of the year had been reported when the estimate was made, with diluted EPS of $8.53 for the six months, so the estimate includes the Anthropic gains already booked. We found no published estimate of free cash flow, so there is no forward market cap to free cash flow. ^[6][5][4][1]

A trailing P/E, sometimes called a historical P/E, uses the last four reported quarters. Amazon reports net income of $135,281 million for the twelve months to June 30, 2026, which gives a trailing P/E of 19.2 (Dalsna Finance calculation). The first six months of 2026 alone included $69,378 million of non operating income, as reported. Trailing free cash flow was an outflow of $7,604 million, so the trailing market cap to free cash flow is not meaningful either. ^[1][5][4]

The last four quarters

Amazon's second quarter release shows net income for each of the last six quarters and free cash flow for the twelve months ending at each quarter, so every figure here is as reported and none is worked out. Because each free cash flow figure already covers twelve months, the four of them are not added up. Net income over the four quarters to June 30, 2026 was $135,281 million, and $62,647 million of it came in the second quarter. ^[1]

Two base cases: the second quarter held flat for a year

Suppose net sales stayed at the second quarter's level for a full year, with no growth and no decline: $200,606 million times 4, or $802,424 million. The first base case keeps the 31.2% profit margin, which gives earnings of $250,588 million, or $23.23 per share on the cover share count. This case is simply the second quarter annualised, so at the annualised P/E it returns the October 30, 2026 close of $240.35 by construction. The other cells only show how the price moves when the same earnings are given a different multiple. ^[1][5][4]

That margin rests on gains outside Amazon's operations. Non operating income was $53,396 million in the second quarter, mostly the Anthropic gains, against $15,982 million in the first. So the second base case uses the 13.7% operating margin, which leaves out interest, taxes and other income altogether: $109,844 million a year, or $10.18 per share. Operating income is counted before tax, so this is not net income. We found no one time item inside second quarter operating income that Amazon put a figure on, so nothing else is taken out. ^[1][2][4]

There is no free cash flow base case. Free cash flow was an outflow for the quarter and for the trailing twelve months, so no multiple can turn it into a share price. The P/E multiples apply to both earnings rows. The market cap to free cash flow multiples do not apply to earnings, so they are left off the grid. ^[1]

What came next

Amazon released its third quarter results on October 29, 2026. They are covered in a separate Dalsna Finance article, which is the place to look for whether the third quarter came in within the range Amazon gave on July 30: net sales of $197.0 billion to $202.0 billion and operating income of $22.5 billion to $26.5 billion. Those were the company's own expectations at the time, which it called subject to substantial uncertainty. This article does not use any third quarter figures. ^[3][1]

Some commitments ran past the quarter's end. The quarterly report says Amazon invested $28.7 billion in OpenAI preferred stock in the first half and the remaining $21.3 billion of its commitment after June 30, and that it put $10.0 billion into Anthropic nonvoting preferred stock in the second quarter. It also says Amazon issued $25.0 billion of US dollar notes after June 30, with maturities from 2029 to 2066, and on September 14, 2026 Amazon reported that it had closed a sale of sterling notes due from 2029 to 2045, £4.25 billion of principal across four tranches (Dalsna Finance calculation: £1.25 billion plus three tranches of £1.0 billion each). Long term debt was $128,894 million at June 30, 2026, against $65,648 million at the end of 2025. ^[4][1][7]

On April 13, 2026 Amazon agreed to buy Globalstar for cash and Amazon stock, a deal the quarterly report says implied a value of about $10.9 billion including debt when it was signed. Amazon expects it to close in 2027, subject to closing conditions that include regulatory approvals and Globalstar meeting certain satellite replacement milestones. The report also describes ongoing antitrust cases brought by private litigants, state Attorneys General and the Federal Trade Commission, and a patent investigation the International Trade Commission opened in June 2026 after a complaint by Xockets. Amazon says it disputes the allegations in these matters. ^[4]

How these figures were made: inputs come from Amazon's earnings releases for the first and second quarters of 2026 and its second quarter 2026 quarterly report on SEC EDGAR, plus the dated closing price and the dated estimate report named above. Calculations use unrounded inputs and are rounded only at the end, with multiples to one decimal and per share figures and prices to the cent. ^{[1][2][4][5][6]}