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By Brian Nelson, CFA
Amazon (AMZN) recently reported first quarter results that beat consensus estimates on both the top and bottom lines. Adjusted net sales advanced 15% in the first quarter compared to the first quarter of 2025. North America segment sales increased 12% year-over-year, while international sales increased 19% year-over-year (11% excluding foreign exchange rates). AWS segment sales increased 28% year-over-year, beating the consensus forecast.
Amazon’s operating income increased to $23.9 billion in the first quarter compared to $18.4 billion in the first quarter of 2025 and consensus of $20.8 billion. North America segment operating income was $8.3 billion, compared to $5.8 billion in the first quarter of 2025. International segment operating income was $1.4 billion, compared to $1 billion in last year’s period. AWS segment operating income increased to $14.2 billion, up from $11.5 billion in the first quarter of last year.
Management had the following to say about the results:
We’re making customers’ lives easier and better every day across all our businesses, and their response is driving significant growth. AWS is growing 28% (our fastest growth in 15 quarters) on a very large base, our chips business topped a $20 billion revenue run rate (growing triple digits year-over-year), Advertising grew to over $70 billion in TTM revenue, and unit growth in our Stores reached 15% (the highest since the tail end of covid lockdowns). We also hit exciting milestones with delivery speed (more than 1 billion items same-day or overnight in 2026 and counting), Project Hail Mary (nearly $615 million at the box office to date and the second most successful non-sequel, non-franchise opening of recent memory), and Amazon Leo continues to resonate with prospective customers, with Delta Airlines the latest to sign on. We’re in the middle of some of the biggest inflections of our lifetime, we’re well positioned to lead, and I’m very optimistic about what’s ahead for our customers and Amazon.
For the trailing twelve months ended March 31, 2026, Amazon’s operating cash flow increased 30%, to $148.5 billion, compared to $113.9 billion for the prior trailing twelve-month period. Over the same trailing twelve-month period, however, free cash flow declined to $1.2 billion from $25.9 billion, driven by higher capital spending. For the second quarter of 2026, net sales are expected to be between $194-$199 billion (consensus was $189.5 billion), or to grow between 16%-19% compared with the second quarter of 2025. Operating income is expected to be between $20.0 billion and $24 billion (consensus was $22.9 billion), compared with the $19.2 billion it registered in the second quarter of 2025. Though Amazon’s $200 billion in expected capital spending during 2026 is not small by any stretch, we continue to like shares in the Best Ideas Newsletter portfolio as we look beyond the build in the current capital spending cycle.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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