Amazon's $62.6bn Q2 profit: $50.5bn is a write-up of its Anthropic stake — while trailing free cash flow turned negative
Q2 10-Q: operating income $27.5bn (+43%), capex $54.2bn. Re-marking Anthropic preferred stock from $14.8bn to $92.5bn produced a gain equal to 81% of net income. Long-term debt doubled in six months
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Amazon Form 10-Q for Q2 2026 (filed 2026-07-31): consolidated statement of operations, 'Investments' note (Anthropic), 'Commitments and Contingencies' note, segment information, MD&A 'Free Cash Flow'
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Amazon (AMZN) reported net income of $62,647m for the second quarter of 2026, 3.4 times the $18,164m of a year earlier. The statement of operations in the 10-Q filed July 31 shows operating income of $27,461m and an 'Other income (expense), net' line of $53,415m. What that other income is, the investments note explains.
What happened
Amazon (AMZN) combines e-commerce with the AWS cloud business and is among the U.S. stocks most widely held by Korean retail investors.
Its 10-Q for the second quarter of 2026, filed July 31, shows net sales of $200,606m, up 20% from a year earlier, and operating income of $27,461m, up 43%. AWS sales were $42,232m (+37%) and AWS operating income $16,621m.
Net income, however, was $62,647m — 3.4 times the $18,164m of a year earlier and 2.3 times operating income. The reason net income so far exceeds operating income is the line 'Other income (expense), net': $53,415m, against $1,117m in the same quarter a year earlier. What it contains is set out in the Anthropic paragraph of the investments note.
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In the 'Investments' note: 'We recorded upward adjustments of approximately $50.5 billion in Q2 2026 and $62.8 billion for the six months ended June 30, 2026 to our nonvoting preferred stock in Other income (expense), net.' It sits inside the $53,415m of other income on the statement of operations.
Is the gain cash?
No. Nothing was sold; the carrying value was raised on the basis of Anthropic's funding prices. The company says that on an Anthropic IPO its securities would convert to nonvoting common stock and it expects to be subject to a customary lock-up.
What does negative free cash flow mean?
That over twelve months the company spent more cash on capital expenditures than its operations generated. What covered the gap and what future commitments exist is covered in the subscriber section.
Where can I verify these numbers?
On SEC EDGAR: Amazon's Q2 2026 Form 10-Q (accession 0001018724-26-000026), statement of operations, 'Investments' note, segment information and the MD&A 'Free Cash Flow' table.
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Amazon Form 10-Q for Q2 2026 (filed 2026-07-31): consolidated statement of operations, 'Investments' note (Anthropic), 'Commitments and Contingencies' note, segment information, MD&A 'Free Cash Flow' · SEC EDGAR · This article is not investment advice. Disclaimer
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