Amazon (AMZN -0.70%) will report its 2026 second-quarter earnings after the market closes on Thursday, July 30. Following the release, Amazon CEO Andy Jassy and other members of Amazon's management team will hold a live earnings conference call with Wall Street analysts.
As a "Magnificent Seven" company and hyperscaler, Amazon is one of the world's largest companies, driving the artificial intelligence (AI) revolution.
That puts a massive spotlight on the company, particularly as it tries to balance building out massive AI infrastructure projects and keeping increasingly nervous shareholders at bay.
While many aspects of the earnings release will come into focus, my prediction is that Jassy will raise Amazon's full-year 2026 capital expenditure (capex) guidance.
Image source: The Motley Fool.
Signs from several directions
Early in the second-quarter earnings season, there are already several signs that Amazon will likely raise its capex guidance.
Recently, Alphabet reported its Q2 2026 earnings results, increasing its full-year capex guidance from $180 billion to $190 billion to $195 billion to $205 billion, putting it in line with or above Amazon's current $200 billion guidance.
Alphabet's CFO Anat Ashkenazi said the increase "is primarily due to an acceleration in the delivery of capacity to meet growing demand." Alphabet also raised its 2026 capex guidance in Q1, whereas Amazon did not, but both are big players in the cloud space.
Alphabet's stock fell on the increased capex guide, and Amazon's stock also fell as well, as investors brace for bad near-term news.
While capex is needed to build out AI infrastructure that will power the boom, the hyperscalers have already drained their balance sheets, with many expecting negative free cash flow over the next few years.
NASDAQ: AMZN
Key Data Points
Now, they are seeing some returns on it, as Alphabet also reported 82% year-over-year revenue growth in its cloud business in Q2.
But investors are worried that the $700 billion plus the Magnificent Seven are expected to spend on capex in 2026 alone is unlikely to yield strong enough returns.
In Q1, Jassy tried to reassure investors that the company was not gambling on AI but simply responding to staggering demand: "We continue to be confident in the long-term capex investments we are making," Jassy said during the earnings call. He added:
Of the AWS capex we intend to spend in 2026, much of which will be installed in future years, we have high confidence this will be monetized well, as we already have customer commitments for a substantial portion of it and that it will yield compelling operating margins and ROIC [return on invested capital].
Additionally, Jassy said the company would not hesitate to increase near-term capex if Amazon Web Services (AWS), its cloud business, continues to demonstrate rapid growth.
Jassy also noted that AWS' capex is spent on items such as land, power, buildings, chips, servers, and networking gear before they can be monetized. The spend turns into revenue six to 24 months after, he said.
Memory prices have also soared recently, so companies like Amazon could have to spend more on NAND flash memory and dynamic random-access memory (DRAM), which is needed to feed data to the graphics processing units (GPUs) in data centers.
The market is prepared
Seeing Amazon sink after Alphabet raised its full-year capex guidance suggests the market is now prepared for a hike in Amazon's 2026 capex guidance when it reports earnings.
If Amazon manages to maintain its $200 billion capex guidance, the stock may react favorably, as the market is prepared for an increase. However, if the guidance increases meaningfully, that could put shares under pressure.
It's tough to know how this whole AI story will turn out, but companies like Amazon are spending heavily with confidence that their investments will pay off.
Investors should focus less on near-term capex numbers and instead focus on understanding, as best they can, whether the AI demand we are seeing today is here to stay and grow, or if the AI story is in later innings than some believe.
