Cloud computing and online retail behemoth Amazon (NASDAQ: AMZN) reported Q2 CY2026 results beating Wall Street’s revenue expectations, with sales up 19.6% year on year to $200.6 billion. On the other hand, next quarter’s revenue guidance of $199.5 billion was less impressive, coming in 2.1% below analysts’ estimates. Its GAAP profit of $5.75 per share was significantly above analysts’ consensus estimates.

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“AWS is booming, growing 36.7% year-over-year in Q2—our fastest growth in 18 quarters—and our AI and Chips businesses each eclipsed run rates of more than $25 billion,” said Andy Jassy, President and CEO, Amazon.

Revenue Growth

Amazon proves that huge, scaled companies can still grow quickly. The company’s revenue base of $443.3 billion five years ago has increased to $775.7 billion in the last year, translating into an impressive 11.8% annualized growth rate.

Over the same period, Amazon’s big tech peers Alphabet, Microsoft, and Apple put up annualized growth rates of 15.1%, 14.6%, and 6.1%, respectively. Comparing the four is relevant because investors often pit them against each other to derive their valuations. When adjusting for these benchmarks, we think Amazon’s price is fair.

We at StockStory emphasize long-term growth, but for big tech companies, a half-decade historical view may miss emerging trends in AI. Amazon’s annualized revenue growth of 13.3% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Amazon reported year-on-year revenue growth of 19.6%, and its $200.6 billion of revenue exceeded Wall Street’s estimates by 2%. Company management is currently guiding for a 10.7% year-on-year increase in sales next quarter. Looking further ahead, sell-side This projection is admirable for a company of its scale and illustrates the market sees some success for its newer products.

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Profitability: The Key Debate

Many investors understand that Amazon’s e-commerce business caps its gross margin, which averaged 47.8% over the last five years. The company lags behind its pure-play tech peers because it sells many commoditized goods online where it must acquire and hold physical inventory.

What the market debates, however, is where Amazon’s long-term operating profitability could ultimately settle. Sure, its five-year margin of 8.4% was mediocre, but it rose by 8.9 percentage points thanks to leverage on the fixed costs in its consumer-facing businesses and the highly profitable AWS segment becoming a larger portion of its revenue. Our question is if Amazon’s momentum can continue and result in a mid-to-high teen percentage margin somewhere down the line.

The company’s North America segment holds the keys to this answer. Throughout the years, Amazon has made huge investments to not only attract hoards of customers into its ecosystem but also retain them. Some areas of focus in this effort included its unmatched delivery network and video streaming content.

Bulls will argue that Amazon can afford to ease up and begin riding its investments of the last two-plus decades. Its trailing 12-month operating margin of 12.1%, combined with its performance over the last few years, suggests Amazon’s long-term profitability could go much higher, potentially leading to earnings and a stock price that follows.

Key Takeaways from Amazon’s Q2 Results

We were glad that Amazon's revenue and EPS outperformed Wall Street’s estimates. Importantly, AWS revenue beat and growth accelerated sequentially compared to last quarter. On the other hand, its revenue guidance for next quarter missed. Overall, we think this was still a decent quarter. The stock traded up 8.3% to $255.09 immediately following the results.

Indeed, Amazon had a rock-solid quarterly earnings result, but is this stock a good investment here? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).