AWS Revenue Jumps 37 Percent—Is Amazon Stock Still an Attractive Investment?

Amazon has once again captured market attention after reporting 37% growth in Amazon Web Services (AWS) during the second quarter of 2026, marking its fastest growth rate since 2021. 

This achievement exceeded analysts' expectations and reinforced AWS's position as the company's primary growth engine amid rising demand for cloud services and artificial intelligence (AI).

However, investors are not only focused on revenue growth. Rising capital expenditures to build AI infrastructure have also become a major concern, as they may put pressure on the company's short-term cash flow. 

This situation raises an important question: is Amazon stock still an attractive investment after AWS's revenue surge?

Below is a comprehensive analysis of Amazon's latest performance, the outlook for its cloud business, and the valuation of AMZN stock.

Key Takeaways

• AWS revenue grew by 37% to US$42.23 billion in Q2 2026, exceeding market expectations.
• Growth was driven by increasing demand for AI services, cloud computing, and Amazon's proprietary chip development.
• Although the cloud business outlook remains strong, investors continue to monitor Amazon's high AI capital expenditures and increasingly premium stock valuation.

AWS Revenue Soars in Q2 2026

The highlight of Amazon's earnings report was AWS's 37% year-over-year revenue growth in the second quarter of 2026, reaching approximately US$42.23 billion. 

This figure exceeded analysts' estimates of around US$40.54 billion.

This marks AWS's fastest growth in the past five years. The performance demonstrates that demand for cloud services remains exceptionally strong, particularly among companies expanding their adoption of generative AI technologies.

In addition to providing cloud computing services, AWS also benefits from Amazon's in-house AI chip development, designed to improve data center efficiency while reducing customers' operating costs.

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Why Is Amazon's Cloud Business Growing Rapidly?

The success of Amazon's cloud business is closely tied to major changes across the technology industry.

Companies across various industries are racing to build AI-powered applications that require significantly greater computing capacity than traditional applications. This trend has driven demand for data storage, AI processing, and cloud infrastructure services.

AWS is one of the world's largest providers capable of meeting these needs through its global network of data centers, machine learning services, and proprietary AI chips such as Trainium and Inferentia.

As more businesses adopt AI, AWS is expected to have substantial room for growth over the coming years.

Impact of AI Business on AWS Revenue

One of the biggest factors driving the impact of AI on AWS revenue is the growing adoption of generative AI models.

Companies now require infrastructure capable of handling both AI model training and inference at scale. AWS provides these capabilities through a wide range of integrated cloud solutions.

Amazon is also continuing to expand its investments in AI hardware and new data center networks to meet surging demand.

While this strategy boosts revenue, it also significantly increases the company's capital expenditures.

For investors, the question is no longer whether AI can increase AWS revenue, but whether these substantial investments can continue to generate healthy profit margins over the long term.

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How Did Amazon Perform Overall in 2026?

Beyond AWS, Amazon still generates the majority of its revenue from its global e-commerce business.

However, AWS contributes far more to the company's profitability than its retail business because it enjoys significantly higher margins.

Meanwhile, Amazon's digital advertising business continues to expand and has become another important revenue stream alongside cloud computing and e-commerce.

With these three major business segments, Amazon's 2026 performance demonstrates that the company remains capable of sustaining growth despite intense competition in the technology industry.

Amazon Stock Outlook After the Earnings Report

Following the earnings release, investors shifted their attention to the outlook for Amazon stock after the company's financial results.

From a fundamental perspective, AWS's stronger-than-expected growth signals that Amazon's AI strategy is beginning to generate meaningful revenue.

However, the market is also closely watching the company's substantial capital spending on AI infrastructure.

If AWS continues to grow while cloud margins remain stable, these investments could generate significantly greater returns over the coming quarters.

On the other hand, if capital expenditures rise faster than revenue growth, the market may begin to question the efficiency of the company's capital allocation.

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AMZN Stock Valuation After Cloud Growth

From a valuation perspective, AMZN stock is no longer considered inexpensive following its cloud-driven growth.

Amazon's Price-to-Sales (P/S) ratio stands at approximately 3.4x, above its historical median of around 2.5x.

This indicates that the market has already priced in high growth expectations for the company.

Although several valuation models still suggest Amazon stock is trading close to its fair value, investors should continue to consider the risks if cloud growth begins to slow or AI-related spending continues to accelerate.

Additionally, insider stock sales over the past several months have become another factor closely monitored by market participants.

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Is Amazon Stock Worth Buying While AWS Is Growing?

The biggest question for investors today is whether Amazon stock is worth buying while AWS continues to grow.

The answer depends on your investment horizon.

For long-term investors, AWS remains one of the most promising cloud businesses, supported by the continued expansion of global AI adoption.

However, for short-term investors, Amazon stock may remain highly volatile, especially if the company announces larger-than-expected increases in capital expenditures.

Therefore, the next earnings report will be crucial in determining whether AWS's growth can truly translate into sustained earnings and cash flow improvements.

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Conclusion

AWS's 37% revenue growth demonstrates that Amazon has capitalized on the AI and cloud computing boom better than the market expected.

The fundamentals of Amazon's cloud business remain very strong, but the company's richer valuation and substantial AI-related capital spending are key factors investors should continue to monitor.

As long as AWS can sustain revenue growth while maintaining profitability, Amazon's long-term investment outlook remains attractive. Nevertheless, investors should carefully consider valuation and investment risks before making any decisions.

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FAQ

What drove AWS revenue to increase by 37%?

AWS growth was driven by increasing demand for cloud computing services, generative AI, and the use of Amazon's AI chips for large-scale computing needs.

How much revenue did AWS generate in Q2 2026?

AWS recorded approximately US$42.23 billion in revenue, exceeding analysts' expectations of US$40.54 billion.

Why is AI business important for AWS?

AI requires massive computing capacity. This increases demand for AWS cloud services, making it one of the company's main revenue growth drivers.

Is Amazon stock valuation still attractive?

Amazon's current valuation is higher than its historical average based on the Price-to-Sales ratio. This means the market has already priced in strong future growth expectations.

Is Amazon stock worth buying after the earnings report?

Fundamentally, Amazon's outlook remains supported by AWS and AI growth. However, investors should also consider risks from high capital expenditures, premium valuation, and potential stock price volatility.