Amazon raised its 2026 capital spending forecast to $220 billion from $200 billion, citing rising memory costs and surging artificial intelligence demand.

The e-commerce giant reported second-quarter revenue of $200.61 billion, beating analyst estimates of $196.47 billion. Amazon Web Services revenue jumped 37% year-over-year to $42.2 billion, marking the cloud unit's fastest growth since 2021.

"Even at that amount, we will still not have enough capacity to meet all the demand we have in 2026," CEO Andy Jassy said on an investor call. "I believe this dynamic will also be true in 2027 too."

The capex increase follows similar moves by tech giants racing to build AI infrastructure. Alphabet recently hiked its spending plans to as high as $205 billion for 2026.

AI investments drive massive spending

Amazon's AI and homegrown chips divisions both exceeded a $25 billion annual revenue run rate, Jassy said. The company's Trainium and Graviton chip brands represent a key growth pillar as it competes with Nvidia in the AI hardware market.

Capital expenditures reached $54.2 billion during the quarter, up from $32.1 billion a year earlier. The heavy spending has pushed Amazon's free cash flow into negative territory, with a $7.6 billion outflow over the trailing twelve months.

AWS backlog — contracted work not yet online — reached $496 billion during the quarter, highlighting the scale of demand for cloud services.

Strong results across business units

Net income surged to $62.6 billion, or $5.75 per share, from $18.2 billion a year earlier. The company said this includes $53.4 billion in pre-tax income primarily from its investment in AI lab Anthropic.

Amazon's North America revenue grew 16% to $116.2 billion, boosted by Prime Day sales in June. The company more than doubled new customers for its pharmacy service and grew same-day prescription deliveries nearly five-fold.

For the third quarter, Amazon guided for revenue between $197 billion and $202 billion, below analyst expectations of $204.1 billion. The company blamed tough comparisons after shifting Prime Day from July to June this year.