Amazon.com (AMZN) stock has delivered relatively modest returns so far in 2026. However, AMZN stock recently climbed to a new all-time high after the company reported its second-quarter financial results. Although the stock has since retreated somewhat from that peak, several factors indicate that Amazon still has room for further gains.
AMZN's major business segments continue to grow at a solid pace. Amazon Web Services (AWS) is accelerating, while Amazon's investments in AI chips and related technologies could provide another significant long-term growth opportunity. At the same time, its strong operating performance has helped ease investor concerns surrounding the substantial capital spending required to build out its artificial intelligence (AI) infrastructure.
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Although Amazon stock is trading near record levels, solid momentum across its businesses could support additional gains.
Amazon's AWS continues to deliver solid growth, and the momentum will likely sustain in the quarters ahead. Revenue from the cloud segment reached $42.2 billion in Q2, an increase of 36.7% year-over-year (YOY). Management highlighted that the growth accelerated for the fifth consecutive quarter, with AWS adding more than $4.6 billion in revenue compared with the previous quarter. Its backlog has also expanded significantly, reaching $496 billion and growing at a triple-digit rate YOY.
AWS has now reached an annualized revenue run rate of approximately $169 billion. Customers are continuing to migrate workloads to the cloud and expand their reliance on AWS's core services. And, the growing adoption of AI is encouraging businesses to accelerate their cloud transition, pointing to strong growth ahead.
Notably, as customers increase spending on AI, they are also consuming more traditional cloud infrastructure and services. This creates additional demand for AWS's core offerings.
AWS segment generated $16.6 billion in operating income, reflecting both the segment's rapid expansion and Amazon's ongoing efforts to improve operational efficiency.
Amazon's custom chip business has become a meaningful contributor to its financials, with its annualized revenue run rate now exceeding $25 billion and expanding at triple-digit rates YOY. Meanwhile, the company's AI-related revenue run rate has risen substantially from the previous quarter and has also surpassed $25 billion, with triple-digit YOY growth.
AI adoption and post-training reinforcement learning and agent-based tools are also driving demand for CPll. This creates an opportunity for AWS's Graviton processors. Most of its top customers already use Graviton processors. Revenue commitments for the platform nearly tripled quarter over quarter, while Graviton5 is seeing strong growth.
Amazon's advertising business is another important source of growth. Advertising revenue reached $19.8 billion in Q2, representing a 26% YOY increase.
Sponsored Products remains Amazon's largest advertising format and continues to contribute significantly to growth. At the same time, consumers are increasingly finding products through Amazon's conversational and agent-driven experiences, including Alexa+ and Alexa for Shopping.
