Amazon Stock Falls Amid Cloud Growth and Rising Costs

Amazon's stock has fallen 10% in the past month and is currently trading at $255, which is about 10% below its 52-week high. The company recently reported a strong second quarter of 2026, with revenue rising 20% year over year to $200.6 billion and operating income increasing by 43%. However, this growth was partly due to tariff refunds and an energy-contract accounting gain.

The real story behind Amazon's cloud business is even more impressive. AWS revenue grew 36.7% year over year, which management calls its fastest in 18 quarters. The company's cloud unit now runs at a $169 billion annualized rate with a $496 billion backlog behind it.

Despite this strong growth, the stock has been falling due to concerns about Amazon's cash capital spending. Management plans to spend around $220 billion in calendar 2026, up from roughly $200 billion last year. This increase is largely due to the higher cost of memory, and the company expects free cash flow headwinds until its new data centers are open and can be monetized.

However, Amazon's core business remains strong. Revenue over the trailing twelve months is $775.68 billion, up 15.8% against a three-year average growth rate of 13.0%. The company's operating margin has also improved to 12.1%, above its three-year average and its own three-year peak.