Amazon's CEO Andy Jassy addressed fears surrounding AI capital expenditures during the company's Q2 2026 earnings call, revealing that revenue surpassed $200 billion for the first time, marking a 20% year-over-year increase. Operating income rose 43% to $27.5 billion, indicating that profit growth is significantly outpacing sales growth.
Jassy emphasized a 'line of sight' to guaranteed returns on their capital investments, which are primarily directed towards AI and cloud infrastructure. The company raised its full-year 2026 cash capital expenditure guidance to approximately $220 billion, aligning with the growing demand for AI and cloud services.
AWS revenue grew 36.7% year over year, reaching an annualized revenue run rate of $169 billion. This strong performance suggests that Amazon is effectively monetizing its existing enterprise backlog rather than engaging in speculative spending.
Following the earnings report, Amazon's stock price, which had been fluctuating around $230, is expected to rise, prompting a bullish risk reversal trade strategy that involves selling an out-of-the-money put option while buying a call option to capitalize on potential upside. This trade positions investors to benefit from further stock price appreciation while defining their risk exposure