revenue $181.5B, net income $30.3B. Amazon Q1 2026: Operating income +29.6%, capex surges, OpenAI invest + commitment

Consolidated operating income grew 30% year-over-year in Q1 2026 ($18.4B → $23.9B), accelerating from the 20% growth in Q1 2025 ($15.3B → $18.4B). All three segments contributed: North America +42%, International +40%, AWS +23%.

Quarterly capex nearly doubled from $24.3B in Q1 2025 to $43.2B in Q1 2026, reflecting accelerated infrastructure spending for AWS and AI initiatives. The prior-year increase was $13.9B → $24.3B, a 75% jump, but the current pace is even steeper.

Amazon invested $15B in OpenAI's Series C Preferred Stock in Q1 2026 and committed to an additional $35B purchase, subject to conditions. This is a new strategic AI investment not present in the prior-year quarter, when acquisition activity was minimal.

Trailing-twelve-month free cash flow collapsed from $25.9B (March 2025) to $1.2B (March 2026), driven by the surge in capex ($88B → $147B) outpacing the increase in operating cash flow ($114B → $149B). The prior year saw free cash flow halve from $50B to $26B.

Amazon raised $59.5B in debt during Q1 2026, a 23x increase from the $2.6B raised in Q1 2025, and disclosed plans for further financing in 2026. This reflects funding for the elevated capex and OpenAI investment.

AWS revenue growth accelerated from 17% in Q1 2025 to 28% in Q1 2026, driven by increased customer usage. Absolute AWS sales rose from $29.3B to $37.6B, reflecting strong demand for cloud and AI services.

Technology and infrastructure costs rose 29% year-over-year in Q1 2026 ($23.0B → $29.6B), driven by infrastructure spending and depreciation, with no mention of payroll offsets. The prior year saw 13% growth with payroll reductions partially offsetting infrastructure increases.

Quarterly operating cash flow increased from $17.0B in Q1 2025 to $26.0B in Q1 2026, a 53% improvement. Trailing-twelve-month operating cash flow rose from $113.9B to $148.5B, reflecting higher net income and working-capital benefits.

This is a new disclosure not present in the prior-year filing.

The current filing states that U.S. taxable income is reduced by R&D amortization, whereas the baseline stated it was increased by capitalized R&D (with delayed deductibility). The current filing also removes the phase-out language for accelerated depreciation and the 2022 capitalization requirement, reflecting the 2026 Notice's retroactive relief.

Cash and marketable securities increased from $94.6B (March 2025) to $143.1B (March 2026), a $48.5B rise, despite the $15B OpenAI investment and elevated capex. The prior-year quarter saw a decline from $101.2B to $94.6B.

Other income surged from $2.7B in Q1 2025 to $15.6B in Q1 2026, driven by an upward valuation adjustment on Anthropic preferred stock and additional convertible-note conversions. The prior-year gain was primarily from the initial Anthropic conversion, partially offset by Rivian losses.

The Q1 2026 tax provision more than doubled to $9.6B (from $4.6B in Q1 2025), driven by $4.1B of discrete tax expense on the Anthropic investment gains. The prior-year provision rose from $2.5B to $4.6B with a smaller discrete expense.

Amazon disclosed charges for damaged data centers in the Middle East in Q1 2026, contributing to the $447M in other operating expense. This is a new item not present in the prior-year quarter.

Q2 2026 guidance calls for 16-19% revenue growth ($194-199B) and $20-24B operating income, both significantly higher than the prior-year guidance (7-11% revenue growth, $13-17.5B operating income). The current guidance also assumes Prime Day in Q2 2026.

The current filing adds "resource and supply volatility" to the macroeconomic overview and explicitly states that Amazon expects to continue making additional AI investments. The prior-year filing did not call out supply volatility or future AI investment plans.

Finance lease acquisitions surged from $54M in Q1 2025 to $1.6B in Q1 2026, a 30x increase, reflecting a shift toward leased infrastructure (likely data centers or equipment) rather than outright purchases.

Amazon now discloses long-term energy contracts (up to 20 years) that qualify as derivative instruments under GAAP because the company may make or receive net cash payments rather than take physical delivery. The contracts cover approximately 200 million megawatt-hours with a weighted-average remaining duration of 15 years. Fair value measurements use Level 3 inputs (significant management judgment) and may be material to the balance sheet and income statement due to contract duration and valuation volatility, though the Q1 2026 impact was not significant. This is the first disclosure of these derivative instruments.

Amazon issued €14.5 billion ($16.8 billion) of Euro-denominated notes in March 2026 and designated them as net investment hedges to offset foreign currency translation risk on European operations. Unrealized FX gains/losses on these notes flow through accumulated other comprehensive income rather than the income statement, reducing earnings volatility from currency movements. This is a new hedging strategy not present in the prior period.

Total unsecured senior notes outstanding more than doubled from $58.0 billion (March 2025) to $121.8 billion (March 2026), driven by a March 2026 issuance of $37.0 billion in USD notes and €14.5 billion ($16.8 billion) in Euro notes. The combined weighted-average remaining life of the notes increased from 13.2 years to 14.2 years. This represents a major capital raise for general corporate purposes.

Amazon's Anthropic investment grew substantially: total investment reached $8.0 billion in convertible notes (completed by Q4 2025). As of March 2026, the nonvoting preferred stock (from note conversions) is valued at $32.0 billion (up from $14.8 billion at December 2025), reflecting a $12.3 billion upward adjustment in Q1 2026 from observable price changes. The remaining convertible notes are valued at $42.2 billion with $36.3 billion of unrealized gains in AOCI. Combined fair value of the Anthropic position is approximately $74 billion as of March 2026, versus $13.8 billion as of March 2025. The Q1 2026 note conversion generated a $4.5 billion gain in Other income (expense).

After March 31, 2026, Amazon invested an additional $5.0 billion in Anthropic nonvoting preferred stock and established a $20.0 billion financing facility tied to AWS compute-capacity delivery milestones. The facility becomes drawable as Amazon meets delivery milestones and expires 30 months after an Anthropic liquidity event (IPO or direct listing). Draws will be in convertible notes (pre-liquidity) or common stock (post-liquidity). Amazon also has a $5.0 billion option to participate in future Anthropic equity rounds, which would reduce the facility by the amount exercised. This deepens Amazon's financial commitment to Anthropic beyond the $8.0 billion already invested.

Amazon invested $15.0 billion in OpenAI Series C Preferred Stock in Q1 2026 and committed to purchase up to an additional $35.0 billion in Series C shares (or common stock post-IPO) by December 31, 2028. The commitment becomes mandatory upon OpenAI meeting specified milestones or completing a public listing. Amazon also entered into a commercial arrangement for AWS cloud services (including AWS chips) and a joint collaboration agreement to make OpenAI models available on AWS. This is a new, large-scale AI investment and partnership not present in the prior period.

AWS and OpenAI expanded their existing $38.0 billion multi-year commercial arrangement by an additional $100.0 billion over 8 years, bringing the total commitment to $138.0 billion. The arrangement includes contractual obligations related to AWS chip performance. This is disclosed in the unearned revenue note as a performance obligation not yet recognized in the financial statements.

AWS unrecognized performance obligations (future contracted revenue) nearly doubled from $189 billion (March 2025) to $364 billion (March 2026), an increase of $175 billion. The weighted-average remaining contract life increased from 4.1 years to 5.5 years. This reflects major new long-term cloud commitments, including the $100 billion OpenAI expansion disclosed separately.

Amazon announced a definitive agreement to acquire Globalstar for approximately $10.9 billion (including debt) in a mix of cash and stock. Globalstar shareholders can elect $90 cash or 0.3210 Amazon shares per Globalstar share, with cash elections capped at 40% of total shares. The deal includes agreements with Apple (Globalstar's largest customer) to provide services post-acquisition and redeem Apple's equity interests in a Globalstar special purpose entity. Closing is expected in 2027, subject to regulatory approvals and Globalstar meeting satellite replacement milestones. This is a new satellite/connectivity acquisition not present in the prior period.

Equity investments in private companies (not equity-method) increased from $6.1 billion (March 2025) to $48.1 billion (March 2026), driven primarily by the Anthropic nonvoting preferred stock ($32.0 billion) and OpenAI Series C Preferred Stock ($15.0 billion initial investment). This represents a nearly 8x increase year-over-year.

In Q1 2026, Amazon recorded $4.5 billion in gains from Anthropic convertible note conversions (reclassified from AOCI) and $12.3 billion in upward adjustments to Anthropic nonvoting preferred stock from observable price changes. Total Anthropic-related gains in Q1 2026 were approximately $16.8 billion, versus $3.3 billion in Q1 2025. This drove the increase in total Other income (expense), net from $2.7 billion (Q1 2025) to $15.6 billion (Q1 2026).

Deferred income tax expense in the cash flow statement increased from $507 million (Q1 2025) to $12.8 billion (Q1 2026). This is primarily attributable to the $16.8 billion in Anthropic-related gains in Q1 2026, which generated significant deferred tax liabilities on unrealized investment gains.

The income tax provision more than doubled from $4.6 billion (Q1 2025) to $9.6 billion (Q1 2026), driven by $4.1 billion of discrete tax expense on Anthropic investment gains. The effective tax rate increased due to the large taxable gains from Anthropic note conversions and fair value adjustments.

The IRS issued Notice 2026-7 in February 2026, providing guidance on the tax treatment of previously capitalized domestic R&D costs. This is a favorable tax development not present in the prior period.

Amazon added disclosure of a favorable February 2026 Federal Circuit ruling affirming the district court's summary judgment that the Rensselaer/CF Dynamic patent is invalid. The plaintiffs had appealed the March 2024 district court dismissal; the Federal Circuit affirmed in February 2026. The decision is subject to further appeal (likely to the Supreme Court), but this is a favorable development for Amazon.

The company broadened its description of technologies that lower competitive barriers, adding "and other technologies including artificial intelligence" to the prior "internet" reference. This reflects management's view that AI tools now enable smaller competitors to enter markets and compete more effectively, similar to how the internet democratized e-commerce entry in prior decades.

The company added explicit language about AI and machine learning technology adoption risks, clarifying that these technologies are among the "newer activities" where profitability may not meet expectations. This disclosure update reflects the scale of Amazon's AI investments (infrastructure, model development, product integration) and acknowledges execution risk.

The company added "artificial intelligence technologies" and "other communication technologies" to the list of third-party systems it relies on, expanding the scope of disclosed vendor dependencies. This reflects Amazon's increasing use of third-party AI tools (likely including foundation models, AI infrastructure, or AI-powered services) and acknowledges the associated security and operational risks.

The company added language acknowledging that AI technologies can be used to circumvent security controls. This reflects emerging threats where adversaries use AI to automate attacks, generate sophisticated phishing content, or exploit vulnerabilities at scale — a material expansion of the threat landscape beyond traditional attack vectors.

The company broadened the description of network-operator risk from "charge fees to grant access" to "divert customers from or charge fees to access" stores and services. The addition of "divert customers" reflects concerns about intermediaries (ISPs, app stores, platform operators) steering users away from Amazon's services, not just charging access fees — a wider set of potential business disruptions.

The company added a new sentence disclosing ongoing tax and regulatory challenges in Italy. While no dollar amounts or specific issues are provided, the explicit call-out of Italy suggests material exposure or heightened scrutiny in that jurisdiction — likely related to digital services taxes, transfer pricing, or competition investigations that have been active in the EU.