Amazon Q1 2026 earnings highlight AI momentum and record margins

Amazon.com Inc (AMZN) delivered a robust first quarter for 2026, reporting revenue that increased 17 per cent year-on-year to $181 billion. The company’s operating margin expanded to a record 13.1 per cent, underscoring its ability to generate efficient growth across its diversified business segments. As of June 5, 2026, the stock was trading at $246.03, with trailing and forward price-to-earnings ratios recorded at 31.60 and 31.15 respectively.

Amazon Web Services (AWS) remains a primary growth engine, growing 28 per cent year-on-year to reach an annualised revenue run rate of approximately $150 billion. The company’s artificial intelligence-related business has also accelerated rapidly, surpassing a $15 billion run rate within three years. Additionally, Amazon’s custom silicon business exceeded a $20 billion annual run rate, growing at triple-digit rates and reinforcing its competitive advantage in data centre infrastructure.

The retail segment demonstrated renewed strength, with units sold rising 15 per cent, marking the fastest pace since the pandemic period. This indicates healthy consumer demand and continued expansion of the company’s ecosystem. Despite these operational gains, capital expenditures reached $147 billion over the last twelve months, nearly matching operating cash flow of $148 billion. Management views these investments as essential for supporting future growth and generating long-term returns once infrastructure becomes fully operational.

Investors are also looking toward Project Leo, Amazon’s satellite broadband initiative, as a potential source of future upside. With more than 20 launches planned for 2026, management believes the initiative could evolve into a multi-billion-dollar business. The bullish thesis circulating among analysts emphasises accelerating AI-driven growth, record profitability, and the strategic positioning of Amazon’s infrastructure assets.

Valuation metrics reflect market confidence in these growth drivers, with the stock trading at approximately 36 times expected 2026 Net Operating Profit After Tax (NOPAT). Institutional interest remains significant, though slightly diminished from previous levels; 353 hedge fund portfolios held AMZN at the end of the first quarter, down from 381 in the prior quarter. The stock has appreciated by approximately 17.92 per cent since coverage of a similar bullish thesis in May 2025.