Detailed narrative
AWS reacceleration and the AI demand flywheel
AWS revenue reached $37.6B, up 28% YoY — an acceleration of 480bps and the fastest growth in 15 quarters — reaching a $150B annualized run rate and delivering $14.2B operating income. Growth was driven by both AI and core services, with management citing a strong correlation between AI spend and core-service demand as post-training, reinforcement learning and agentic tool usage pull heavily on both GPUs/accelerators and CPUs.
AI revenue is growing triple digits YoY. The Q1 AWS backlog stands at $364B, which explicitly excludes the recently announced >$100B Anthropic deal, and management stressed the backlog has reasonable breadth beyond one or two customers.
Custom silicon: Trainium and Graviton
Amazon's chips business grew ~40% QoQ and now runs at a >$20B annual revenue run rate with triple-digit YoY growth; management said if sold standalone the run rate would be ~$50B, making it one of the top 3 data center chip businesses in the world.
Trainium commitments now exceed $225B, with Trainium2 (~30% better price-performance than comparable GPUs) largely sold out, Trainium3 (30-40% better than T2, shipping since start of 2026) nearly fully subscribed, and much of Trainium4 (still ~18 months from broad availability) already reserved.
Graviton, up to 40% better price-performance than any x86, is used by 98% of the top 1,000 EC2 customers; Meta committed to tens of millions of Graviton cores.
Bedrock, agents and the OpenAI expansion
Bedrock inference customer spend grew 170% QoQ and processed more tokens in Q1 than all prior years combined; it is used by over 125,000 customers, with almost 80% of the Fortune 100. Amazon added OpenAI's GPT-5.4 to Bedrock (5.5 coming) and previewed Bedrock managed agents powered by OpenAI, a stateful runtime Jassy called the future of agent-building.
Turnkey agents (QRO, Transform, Connect, Quick) showed strong traction: QRO developers more than doubled QoQ with enterprise usage up ~10x, Transform saved over 1.56M manual hours, and new Quick customers grew more than 4x QoQ.
Stores, grocery and delivery speed
Worldwide paid units grew 15% YoY, the highest since the tail end of COVID lockdowns, with 600+ new notable brands added. Grocery surpassed $150B in gross sales in 2025, making Amazon the second-largest U.S. grocer, with same-day perishables in 2,300+ cities; perishable sales grew over 40x YoY and same-day perishable customers add ~3x as many items and spend 80%+ more.
Amazon expanded 1- and 3-hour delivery on 90,000+ items and grew ultra-fast Amazon Now (30 minutes) to tens of millions of customers across 9 countries. Average prices on Amazon.com decreased YoY.
Advertising and Prime Video profitability
Amazon Ads generated $17.2B, up 22% YoY, recognized by Forrester as a leader in omnichannel advertising. Amazon deepened its Netflix partnership via Amazon Audiences, partnered with Comcast Advertising for local advertising, and expanded interactive video ads starting with Samsung TVs.
Management explicitly stated Prime Video is now 'a large and profitable business in its own right,' a narrative-only profitability claim not broken out in the segment data. New AI ad tools (Creative Agent, Sponsored Products and Brand Prompts in Rufus) are early, with nearly 20% of shoppers interacting with Brand Prompts continuing the brand conversation.
Emerging bets: Zoox, Amazon Leo and devices
Zoox has driven nearly 2 million autonomous miles and carried more than 350,000 riders, is public in Las Vegas and San Francisco, testing in 8 other cities, and will be available via the Uber app in Las Vegas (LA later).
Amazon Leo has 250+ satellites in orbit with commercial service on track for Q3; it has meaningful enterprise/government revenue commitments (Delta, JetBlue, AT&T, Vodafone, DIRECTV Latin America, Australia's NBN, DP World Tour, NASA), plans to acquire Globalstar for direct-to-device spectrum, and struck an agreement with Apple to power iPhone/Apple Watch satellite services.
Alexa+ early access expanded internationally with users engaging materially more than Alexa classic.
CapEx, free cash flow and the investment thesis
Q1 cash CapEx was $43.2B, primarily AWS and generative AI. Jassy framed the spend as a once-in-a-lifetime opportunity, noting AWS must lay out cash for land, power, buildings, chips, servers and networking 6-24 months before billing customers. Assets carry long useful lives (30+ years for data centers, 5-6 years for chips/servers).
Management acknowledged that in high-growth periods where CapEx growth outpaces revenue growth, early-year free cash flow is challenged until initial capacity tranches are monetized — a cycle they say mirrors the first AWS growth wave, with much larger downstream revenue and FCF expected this time.