Amazon's Cloud Business Is Earning More. Its Cash Is Lagging.
Amazon's cloud business earned $16.6 billion in operating profit in the second quarter of 2026, up from $10.2 billion a year earlier. The figures come from Amazon's July 30 results.
Operating profit is what a business keeps from its sales after paying its day-to-day costs, before interest and taxes. For the cloud unit, Amazon Web Services (AWS), it shows how profitable that part of the company is on its own. AWS is separate from Amazon's retail business, so this number is useful for looking at the cloud side alone.
That is a rise of about 63%. The first quarter grew much less. AWS operating profit was $14.2 billion, against $11.5 billion a year earlier, or roughly 23%. The second quarter of 2025 had grown only about 10%, from $9.3 billion in the same quarter of 2024. Profit growth has swung sharply over the past four quarters, and the comparison will be harder for the next few reports.
Amazon's net income for the whole company was $62.6 billion in the second quarter. That compares with $30.3 billion in the first quarter of 2026 and $18.2 billion in the second quarter of 2025. Net income is an accounting figure that also includes items outside normal operations. It moves differently from the AWS line, so it does not tell you much about how the cloud business is doing.
Cash is the harder number. Bloomberg reported that over the 12 months to the end of the quarter, Amazon's free cash flow was negative $7.6 billion. Free cash flow is the money left from running the business after paying for equipment and buildings, which accountants call capital expenditures. A negative number means that over the year, the company spent more on data centers, networking gear and other equipment than its operations brought in as cash.
Think of a family that spends more on a new roof and furnace than its paychecks cover that year. Its net worth may be fine, but its bank balance falls in the meantime. Amazon's accounts show a similar split, with $62.6 billion of quarterly net income on one side and a cash shortfall over the past year on the other. In my view, the real question for investors is how long the spending will run ahead of the cash it eventually produces. The trailing number cannot answer that.
Sales tell the other half of the story. AWS sales rose 20% from a year earlier to $33.0 billion in the third quarter of 2025, according to Amazon's third-quarter release. In the fourth quarter, sales climbed 24% to $35.6 billion, per its February 2026 results. Sales growth was steady and picked up into the end of the year. Operating profit has grown faster than sales in recent quarters.
Profit growing faster than sales is usually a sign that a business is becoming more efficient. One strong stretch of quarters is not proof of that, though, and I would not lean on it alone.
Investors were focused on the next report. The Globe and Mail reported that Amazon shares fell on Oct. 29, ahead of the company's after-hours third-quarter earnings report. Attention centered on AWS growth, and the article's headline pointed to concerns about capital expenditure. In my view, that focus makes sense. When a company pours money into infrastructure, markets try to price what that money will earn well before the earnings appear.
If you own Amazon, directly or through a fund, the cloud unit's profit trend looks strong while its cash trend is less clear. The third-quarter figures, released after the close on Oct. 29, are the next test. They will show whether profit growth held and whether the cash shortfall is shrinking. I would read them alongside operating profit and the 12-month free cash flow, not net income alone.
