Thank you for standing by. Good day, everyone, and welcome to the Amazon.com First Quarter 2026 Financial Results Conference. At this time, all participants are on the listen only mode. After the presentation, we will conduct a question and answer session. Today’s call is being recorded. And for opening remarks, I will turn the call over to the Vice President of Investor Relations, Mr. Dave Files. Thank you, sir. Please go ahead. Hello, and welcome to our Q1 2026 Financial Results Conference call. Today’s answer questions are via audio and by no facsimile audio. As you listen to today’s conference call, we encourage you to have our press release in front of you, which includes our financial results as well as metrics and material for the quarter. Please note, most other items, all comparisons in this call will be against our results for the comparable period of 2025. Our comments and responses to your questions reflect management’s views as of today April 29, 2026 only, and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today’s press release and filings with the SEC, including our most recent annual report on Form 10-K and other filings. During this call, we may discuss non-GAAP financial measures. In our press release, filed with the company as well as in our filings with the SEC, each of which is posted on our website, you will find additional disclosures regarding non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Our guidance for each of the orders that we see today, and what we believe today to be appropriate assumptions, our results are inherently variable and may be materially affected by many factors, including fluctuations in foreign exchange rates and energy prices, changes in global economic and geopolitical conditions, tariff trade policies, resource and supply volatility, including from tariffs, and customer demand spending, including impacts from stationary fears, inflation, interest rates, regional labor market strains, world events, the rate growth of the internet, online commerce, cloud services, and new emerging technologies, and various factors detailed in our filings with the SEC. Our guidance assumes among other things that we don’t include any additional dispositive restructuring or settlement. It’s not possible to accurately predict the means for our business services, therefore our actual results may differ materially from our guidance. And now I’ll turn the call over to Andy. Thanks for reporting $101.5 billion in revenue up 17% year over year, excluding the $2.9 billion of favorable impact from foreign exchange net sales increase 15%. Operating income was $23.9 billion. Q1 was a strong quarter for Amazon, starting with AWS growth continued to accelerate up 28% year over year. The fastest growth rate in 15 quarters, up $2 billion dollars quarter over quarter. The largest Q4 Q1 AWS revenue increase. AWS now 150 billion dollars annualized revenue run rate basis is very unusual for a business to grow this fast on base to source. The last time we saw growth at this clip, AWS was roughly half this size. We’ve never seen technology grow as rapidly as AI. Amazon is a leader and continues to choose AWS AI to grow our growth perspective three years after AWS launch. The 58 billion dollar revenue run rate. The first three years of this AI wave, AWS’s AI revenue run rate is over $15 billion dollars nearly 260 times larger. There are several reasons customers are choosing AWS AI. First, we’ve built broader capabilities than others. That includes model building with SageMaker, which reduces training time by up to 40%. High performance inference with leading selection of tiered models and Bedrock, which saw 170% growth in customers per quarter over quarter. The process more tokens in Q1 than all prior years combined. We started to make OpenAI models available on Bedrock. Yesterday we added OpenAI’s GPT 5.4 model with 5.5x compute. Yesterday we also started the preview of Amazon Bedrock managed agents powered by OpenAI. The stable runtime environment enables any organization to build generative applications and achieve production scale. We believe that modern generative applications will be staple. This new technology will rapidly accelerate generative adoption. OpenAI says they are seeing unprecedented demand for the new product and we’re seeing heavy customer interest as well. Most of the value companies drive from AI will be to agents. And AWS customers can build agents with their proprietary data and trends, which has been downloaded more than 25 million times across three weeks more downloads quarter over quarter. Customers can deploy agents with enterprise scale security reliability with agent core, which is being used to deploy agents frequently every ten seconds. We also offer turnkey agents for coding, software migrations, business operations, and knowledge workers and zero transform connecting quick. And they continue to resonate with customers. The number of developers using zero more than doubled quarter over quarter and enterprise customer usage increased nearly 10x. Customers have used transform to save over 1.56 million hours of manual effort when migrating modernizing their workloads. The number of new customers using quick has grown more than four times quarter over quarter, and we just now see one of our quick desktop apps yesterday. Very compelling is the inquiry email calendars, Slack, local files, and several other applications used every day. The flag important communications, or even summarizing information, recommendations, composing communications, others. Create agents that highlight or automatically do work that you’d have to do yourself. You can easily keep refining your preferences and quicks advanced knowledge apps enables AI agents to automatically learn from your actions to become more personalized over time. Whatever enterprise customers just told us, quick is just improving how we work. It’s letting us reimagine it. Second, another reason customers continue choosing AWS is that as they expand their use of AI, they want their inference reside near their other applications and data, and much more resides in AWS than anyplace else. Third, as customers expand their AI uses, they also want to consume additional AI services and choosing AWS because we build the broadest and most capable core offerings by wide margin. We offer thousands of features across compute, storage, databases, and Linux security and more. And garner consistently recognized as AWS’s leadership across the major cloud evaluation lists. Fourth, AWS’s strong security operation performance in AI and infrastructure providers startups, enterprises, and governments continue to choose AWS as the foundation for their most critical workloads. There are some other reasons even more customers are choosing AWS. And just in the last quarter’s call, we’ve announced new agreements with OpenAI and RAPID, Meta, NVIDIA, Uber, US Bank, Fox Southwest Airlines, US Army, Bloomberg, SRI Press, AT&T, Nokia, Fundamental, National Geographic Society, PGH, and many more. Our chips business continues to grow rapidly and is larger than one large full slot. We saw nearly 40% quarter over quarter growth in Q1 and our annual revenue run rate is now over $2 billion dollars and growing triple-digit percentages year over year. But this somewhat masks the size. If our chips business was standalone business, full chips produced this year at AWS and other parties as other leading chip companies do, our annual revenue run rate would be $50 billion dollars. As best as we can tell, our custom silicon business is now one of the top three data center chip businesses in the world. The speed with which we got here is extraordinary, and we have momentum for our custom AI silicon. We recently shared very large multi-year multi-gigawatt training commitments to two leading AI labs in the world and RAPID and OpenAI, as well as increasing number of companies like Uber betting on training. And we now have over $225 billion dollars in revenue commitments for training. Our training chip has about 30% better price performance and comparable GPU use, and has largely sold out. Training three, which started shipping in the start of 2026, and is 30 to 40% more price performance than training two, is nearly fully subscribed. Much of training four, which is still about 18 months from broad availability, has already been reserved. Amazon Bedrock, which is used expansively by over 125,000 customers, runs most of inference on training. Almost 80% of Fortune 100 companies are using Bedrock. We also just announced that Meta is committed to using tens of millions of graphics cores. Graphics cores are industry leading CPU chips, which allows Meta to run the CPU-intensive workloads behind generative AI with the performance and efficiency needed at scale. AI is commonly seen as a GPU story, but the rise of generative workloads, real-time reasoning, code generation, reinforcement learning, multi-step task orchestration, is driving massive CPU demand as well. As AI systems shift from answering
Questions to take action. In post-training and influencer ops, the two required wholesale and CBU’s. That’s why Metro’s growth over time, which delivers up to 40% better price performance than any other AWS’s processors, and now used by 90% of top 1,000 easy-to-customer. Nobody has a better set of chips across AWS CBU workflows. And AWS with training and growth time, and we’re unusually well positioned for this AI inflection, where the early stages of experiencing. One of the largest number of AI chips we’re bringing in our training, we continue to have a deep partnership with NVIDIA. We’ve been manufacturing them, continue orders of substantial quantities. We’ll be partners for as long as I can foresee. We’ll always have customers wanting raw NVIDIA AWS, and we will also have very large chips business ourselves. Customers always one choice. It’s always been true, and always will be true. Different companies will offer different benefits for customers, and the uniquely strong price performance the training offers is compelling to external and internal customers. For perspective scale, we expect training will save us tens of billions of dollars of capex each year, and provide several hundred basis points of operating margin advantage versus relying on other chips for inference. Finally, we continue to be confident in the long-term capex investment we’re making. 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 substantial portions of it, and that will yield compelling operating margin and ROI’s. As we’ve been sharing, the faster AWS grows, the more short-term capex we spend. AWS’s layout, cash flow, land, tower, building, chips, servers, and networking gear and bandwidth will be monetized typically 6 to 24 months before we start billing customers, depending on the component. However, these capex investment funds assets with many years useful lives: 30 plus years for data centers, 5 to 6 years for chips, servers, and networking gear. The free cash flow and ROI’s for these investments are typically quite attractive a couple years after being in service. However, times have very high growth like now, where the capex grows meaningfully, outweighs as the revenue grows. The early years for cash flow challenges until these initial charges of capacity are being monetized and revenue growth outweighs capex growth. We’ve been through this cycle with the first big AWS growth wave, and like the results, we expect to see similarly about the next wave with much larger potential downstream revenue free cash flow. On now-turn stores, units grew 15% year over year, the highest we’ve seen since the tail end of COVID lockdowns. We continue expanding selection and adding more than 600 new notable brands. Our growth business continues to grow quickly across perishables and non-perishables, and with more than $150 billion in gross sales in 2025, we’re now the second largest grocer in the U.S. We offer perishables delivery same-day alongside millions of other items in more than 200 cities and towns across the U.S. With more to come. Prime members are loving the convenience of getting fresh groceries alongside other products at Amazon. And perishable sales are growing over 40 times year over year, and making nine of the top 10 most ordered items for same-day delivery where the services available. Customers shopping same-day perishables build larger baskets, adding nearly three times many items to their order, and spend over 80% more than customers do. Wholesale margins also continue to accelerate with over 55 stores today, and a hundred more coming in the next few years. We remain committed to meeting or beating other retailers on price, and Q1 average prices of products offered on Amazon. Com decreased compared to the same year last year. Prime Day will take place in most countries in June, which will bring Prime members even more savings across every category. We continue finding new ways to speed up delivery for customers in both cities and rural areas. We offer millions of items available for same-day delivery with Prime up to 40 times the selection of typical big-box retail store, and we deliver more than 1 billion items same-day over the years so far this year. We’re also making delivery even faster. Recently, announcing one and three-hour delivery options on over 90,000 items, with one-hour delivery available in hundreds of cities and towns, three-hour delivery in two thousand plus cities and towns, and more on the way. And we continue to expand our ultra-fast delivery service Amazon Now, which offers delivery in 30 minutes or less on thousands of items. As our delivery India orders are increasing 25% month over month, with Prime members shopping frequently once they start using it. The service is now available to tens of millions of customers across nine countries, with more coming well. The stores team also continues to enable delivery for customers with AI. We launched teleAI, a 24×7 AI-powered personal health agent backed by one medical condition. They give U.S. customers instant clinical guidance and take action with their permission, from booking appointments to managing prescriptions to facilitating medical treatment with a real-world medical provider. Rufus’ augmented AI shopping assistant continues to resonate with customers. Rufus can research products, track prices, and auto-buy products as store when they reach a set price. Monthly active users are up over 115%, engagement is up nearly 400% year over year, and we recently introduced new AI experiences sellers and sellers central that dynamically generates customer personalized visualization of data insights and scenarios tailored to the seller’s goals. It’s early, but the initial response feedback is very strong. Moving on to Amazon Ads, we continue working to be the best place to brand for all sizes of their businesses, and we’re pleased with the continued strong growth across our full funnel offerings, generating 17.2 billion dollars of revenue in the quarter and up 22% year over year. For us, recently recognized Amazon Ads is the leader in omnichannel advertising platforms, with unmatched supply insights for connected TV commerce media. We deepen our Netflix partnership with Amazon audiences, which enables advertisers to apply Amazon’s exclusive signals for shopping browsing and streaming. Netflix is highly engaged viewers, three times audiences and driving stronger performance. We also partner with Comcast advertising to expand local advertising to thousands of brands, and expand interactive video ad capabilities to partners starting with Amazon TVs. Our ads team also continues to invent and deliver for advertisers with AI. For example, we expand creative agent, the agent partner with clients and execute higher-creative processes to Canada, France, Germany, India, Italy, Spain, and the UK. And we recently introduced sponsored products and brand prompts in Rufus that help brands showcase products and customers make more informed buying decisions. It’s early, but we’re seeing nearly 20% shoppers who interact with brand prompts in Rufus continue the conversation about that brand. We also continue to invent and see momentum in several other areas. Not mentioned, starting with entertainment, moviegoers flock to Project Columbia, with nearly $615 million in global box office today. It’s opening weekend was the second biggest for any non-sequel non-franchise film in the last decade. We also surpassed a hundred million viewers globally for the global movie trilogy, with all three films reaching number one in more than 170 countries abroad. In live sports, we offer exclusive coverage of the NBA’s live play tournament with total viewership up 18% compared to last year on cable. Alexa Plus early access expanded to millions more Prime members in Mexico, the UK, Italy, Spain. Customers are loving Alexa Plus, talking Alexa twice as much for longer duration across a wider breadth of topics. Completing purchases on devices three times more, streaming music 25% more, and using smart home functions 50% more than Alexa Plus. Zeus now driven nearly 2 million miles and carrying more than 350,000 riders is available to the public in Las Vegas and San Francisco, and testing in eight other cities. We recently announced Zeus will be available with Uber app in Las Vegas and Los Angeles in the future, and finally, Amazon Leo continues getting momentum with commercial servers on track to launch in a few months. We already have meaningful revenue commitments from airlines, governments, including Delta Airlines, JetBlue, AT&T, Verizon, Directv, and America, Australia, National broadband, and more deep world, foreign, and others. We also announced we plan to acquire global star, which will expand Leo’s satellite network with direct-to-device capabilities, and we entered agreement with Apple for Amazon Leo to power satellite services for iPhone and Apple Watches. We’re in the middle of some of the biggest fluctuations of our lifetime. Amazon has the culture of an owl and the resources to make so many customers’ lives better and easier, and to build multiple new long-term businesses with substantial turn investment capital for cash flow. We will continue.
Investing to make it grow. With that, I’ll turn it over to Brian. Thanks, Andy. Let’s start with our top-line financials. Global revenue was 181.5 billion dollars, a 15% increase year over year, excluding the 180 basis points favorable impact to foreign exchange. Global operating income was 23.9 billion dollars, with an operating margin of 13.1%, our highest operating margin ever. Across segments, we continue to increase for customers’ operating margins. In the North America segment, first quarter revenue was 104.1 billion dollars, an increase of 12% year over year. In our national segment, revenue was 39.8 billion dollars, an increase of 11% year over year, excluding the impact to foreign exchange. We see most top-line revenue perform well in Q1, including our big spring sale. We also saw particularly strong performance with our party sellers, foreign quarter traders to our broad selection and competitive pricing. Our sellers saw strong sales growth in Q1, particularly in the U.S. As well as Europe and Brazil, where we recently lowered seller fees. We’re seeing our investments in sellers for its revenue and internal growth business. Prime continues to see seller growth and reflects the value members receive from the program. Prime videos keep seller with a prime value proposition and important driver of new member acquisition. Our investment in original and exclusive content and libraries, combined with third-party partner titles, offer the best selection of premium video content. In addition to delivering compelling value to prime members, advertisers and partners, prime videos deliver an profitable business and strong rate. Dallas, fifth segment profitability. North America segment operating income was 8.3 billion dollars with an operating margin of 7.9%. In our national segment, operating income was 1.4 billion dollars with an operating margin of 3.6%. We’re pleased with the segment network performance in Q1. The team was working on the network overall infrastructure 15% continued to optimize our cost operative the segment network as our content cost grew 12% year over year and the segment sales grew 9% year over year, both on a national basis. As our network conditions improve, we will deliver faster and improve the customer experience while the same time lowering our costs to serve. We have seen meaningful opportunities to further increase the diversity across global fulfillment networks. All will continue to raise the broad delivery speed. We will keep optimizing inventory placement to shorten distance travel, reduce transportation and improve consolidation rates. Alongside these efforts, we deploy robotics and automation, which will integrate our operations for decades. Other generation technology offers significant efficiency, which will improve new and existing facilities. All our U.S. large format fulfillment centers in 2026 will have this latest generation technology. Our yearly positive results with increased safety, higher productivity and lower costs serve. Moving to our AWS segment, revenue was 37.26 billion dollars and gross seller is 480 basis points to 28% year over year, driven by core AI services. We continue to see customers increase cloud migration and scale use of AWS core services. Customers seeking the full benefits of AI are accelerating the transition to cloud. We also see strong correlation between AI spend and growth. Customers spend more AI, we see corresponding demand increasing for. We expect to see increased ROI as customers move more AI workloads into production, strengthening demand for core services. Our AI revenue is growing triple digits year over year, we’re bringing more capacity online to meet high customer demand, also driving meaningful efficiency gains across our store base. Our AI offerings continue to gain traction with customers, and bedrock is being significantly driver. In 2025, we delivered four excellent improvements in training tools to improve. And this maturity of bedrock core solutions training efficiency gains directly translate into more capacity to serve customers. Our AWS operating income was 14.2 billion dollars and reflects strong growth coupled with our focus on driving efficiency across the business. Net earnings of total company capital expenditures are cash capital is 43.2 billion dollars in Q1. Primarily related to AWS and general AI, has invested for strong customer demand. We will continue to make significant investments, especially in AI, as we believe the massive opportunity with the potential to drive long-term revenue and free cash flow. I’ll finish with our financial guidance for Q2. The following guidance assumes prime day occurs in the second quarter in most large distributors, including the U.S. In the prime day occurs in the third quarter in Australia, Brazil, India and Japan. Then, in 2025, prime day will include three full countries. Future net sales are expected to be between 194 billion dollars and 199 billion dollars. We estimate year over year impact changes in foreign exchange rates and currency rates, which we expect to be ahead of the pro monthly ten basis points in the quarter. Future operating income is expected to be between 20 billion dollars and 24 billion dollars. We continue to see strong sales trends carrying to Q2, and I’ll mention a few items on the operating guidance. First, the segment losing impact versus seasonal staff and staffing competition expense Q2, driven by timing of our annual cost increases. Second, within North America segment, we do expect the year over year cost increase of approximately 1 billion dollars related Amazon Leo, as we manufacture more satellites and preparation for service offering. Amazon Leo’s more services on track to launch in Q3, and we expect to begin capitalizing certain costs in Q4, including production and launch costs. Several of our guidance is based higher transportation costs related to inflation, which is partially offset by recently implemented fuel and logistics related expediter charges. I’m thankful to our teams across the company for their hard work in educating customers. We remain focused on driving even better customer experience, which is only reliable way to create lasting value for our shareholders. With that, let’s move on to your questions. Thank you. At this time, we will now open the call for questions. We ask each caller to please limit yourself to one question. Thank you. If you’d like to ask a question, please press star one on your keypad. We ask that when you pose your question, you put your handset to provide optimum sound quality. Once again, to initiate a question, please press star then one on your telephone at this time. Please hold while we pull for questions. And the first question comes from the line of Eric Sheridan, with Goldman Sachs. Please proceed with your question. Thanks so much for taking the question. You know, Andy, across a ray of knowledge, you may recently we’ve been to you asked and we’ve watched the panel. What you wrote in the shareholder can you talk a little bit about the need to level up investment over the next couple of years to scale computing capacity? Can you walk current state of revenue backlog and how we should be thinking about your new approach to customers and AI infrastructure to meet the position you’ve comfortably built that scale? Thanks so much. Yeah, well, we to your point, Eric, we made a lot of announcements over the last several months. We’re really pleased with the growth that we’re seeing in AWS right now in 28% year over year, and fastest growth rate in 15 quarters for us. We’re on a 28% and 150 billion dollar annual runway base, is not simple to do, and I think there’s a few things for now that you know. First is just we continue to see people choosing AWS for AI, in part because we’re really broad selection now. The part because people want their infrastructure scalable to be close to their data and applications, so much more within AWS elsewhere. And part because we have the strongest third-party operations performance, just we can see it in our numbers. We’re witnessing very substantial AI growth, and then at the same time, we’re seeing very significant growth in our core business. And some of that are the migrations of pickup from enterprises from on-premises to the cloud, but a lot of that is also as AI growth is exploding. It turns out that we still a core growth as well. All the post-training, all the reinforcement learning, all the agent action, we’ll use it to be agent-driven, and if this was what you asked about on the shift side, which is because we have a new full collection.
We have the leading CBU shopping grow time, and we have the leading price performance token and training. It means we’re really unusually well positioned for the inflation we’re seeing, and the growth we’re experiencing. So, you know, we I don’t have an update on a new update on capital expenditures, but we we do do this as truly a once in a lifetime opportunity. Where every application we know is going to be invented, and there are so many new applications that none of us ever imagined or dreamed would build, there’s starting to be built and will be built, and all that is going to be built on top of that with the lot of expansion of CBUs as well. So, I think what I expect that we will invest is it’s going to be capital over the coming years to pursue that opportunity, and that our customers or shareholders and Amazon in general will be much better off down the road because of it. And the next question comes from the line of Brian Novak with Morgan Stanley. Please proceed with your question. Great, thanks. Taking my question, I have two. One is on the accounts side. I probably get it in the queue, but can you just give us the up what the AWS backlog looks like, and so any any visibility on the rest of that backlog beyond the big labs? That’s the first one. And then the second one, is you sort of think about milestones for for roofs and the agentic commerce for you in 2026. What are you most focused on making sure you accomplish on the agentic side? This year, just make sure you stay at the nice edge of the agentic commerce offering. Thanks. Yeah, on the backlog, the backlog for Q1 is over $6 billion dollars. That does not include the recent deal that we announced with Dropbox for over $100 billion. There’s reasonable breadth and that as well as not just one customer to customers. On the agentic commerce milestone question, you know we are very bullish on what agentic commerce will look like. I think it’s going to be very good for customers and will go on for. I think it’s good for us too. And you can see some of that focus from us in in what we’re building with roofs. If you haven’t checked out roofs in a while, it’s really substantially grew over the last year, and we have a lot of customers using it as I mentioned earlier. You know the use of monthly active users up over 115 percent roofs and they each month over 4 percent year over year. And you know I think uh while while I think there will be we’ll do a lot of work with third party horizontal agents to try and make customers experience better. And by the way, I do think that it reminds me in some ways the stage we’re in of what we saw in early days of search engines and their trying to refer business to e-commerce. You know it’s it’s never been a giant part of referrals to e-commerce business, but over the years the experience got better. And what you see with agentic commerce is a small fraction of what we see with the search engine referrals, but the experience just hasn’t gotten great with third party horizontal agents yet. They they’re not often able to get the pricing right, the product information right. They don’t have any personalization there, shopping history, and so we we do want to see that get better with third party horizontal agents. We’re having conversations with all those folks to try and make better and find something that works for customers and all the companies. And that’s really interesting over time. Which agents customers choose to use? I happen to think that if going to a particular retailer that you you like to do business with, you like to shop from, if they have great agentic shopping assistant, you know often start there because where you’re doing your shopping, it’s easier to come and they have better product information, they have better information about what the customers like you are buying. You can you can they also are seeing just how your account and your shipping information works there. So, you know that’s what we’re aiming to make roofs be is we’re we’re aiming to have it be the best shopping assistant anywhere. And I think we’re on that path. Thank you. The next question comes from the line of Justin Post. Thank you, Mark. Please proceed with your question. Thank you. I’d like to ask two models and then one on training. So, on models, looks like you might have backfilled a full suite of new models on that rock. Just wondering how big of an impact that is, and how focused maybe you are on on your own model, and then second, share the letter mentioning might be on the sell wrap of training. Just wondering, you know, with your capacity and training, how you think about timing that and how big of an opportunity. Thank you. Yeah, on models question, I think the fact that we’re going to have all the open AI models available in Bedrock is a big deal. It’s a big deal for customers. You know, we we have we obviously have a very large amount of AI being done in Bedrock today on the models we have, and this is in Robo, and and these all, you know, host others, but the one thing you were over and over again with every technology was true innovation, true analytics, true um um uh and models, true shifts to where the customers want shifts, they’re not wanting to roll the world, and they want shifts in each of the models are better at something than than the other models, and so people for a long time wanted to consume open AI models in Bedrock. You know, we just enabled yesterday the the stateful model, the five dot four model, and we’ll enable the most recent five dot five model in the next couple weeks. And you know, most of the model work and most of the AI is done in stateless models. You’re kind of talking in and to and out. And while I think there will continue to be lots of work done that way, I think the future of using models is stateful model, stateful AI, and that’s because when you’re building agents, you’re building AI application. You don’t want to start a new every time you interact with the model. You want to store state. You want to store, you know, you want to store identity. You want to store what the conversation and the actions have been. You want to reach out and do a little bit of compute here. You want to have the tools be able to reach the models, reach out and different tools, the complex different tasks that only happens if you’re able to store state. And so, the Bedrock managed agents that we collaborate with and vented with OpenAI that we just asked to preview yesterday is also I think that’s the future of how these agents are going to be built. Something nobody else has. I think it’s very exciting to our customers. Of course, we’ll have other models like context things like that as well. I think it’s a big deal for customers, and I think it’s going to be good for us as well. On the question about training and the notion of our sell wrap over time, I do think it’s very much possible. You know, always we have the balance. We have such demand right now for training, and we have such demand from various companies who will consume as much as we make that we have to decide how much we’re going to allocate to existing demand customers, how much we’re going to save to sell wraps, and for existing customers that we sell training to, how many will be training plus running on our cloud infrastructure versus just the tips and sales. But I expect over time there’s a good chance we’ll sell wraps over the next couple years. And the next question comes from the line of Rob Sanderson with Luke Applemark. Please proceed with your question. Yeah, thank you. Thanks taking the question. I wanted to ask a little bit about Amazon Leo. Can you maybe help me with some of the revenue opportunity in consumer and in enterprise over the next few years? Where the governor is on the ramp. Can you talk about types of new services that you will be able to deal with? You know, global stores, structure, and the spectrum that maybe you’ve addressed before, or maybe you you maybe get to go more quickly now. And then you know how best to build the longer term business. You know, you’re just beginning to launch commercial services, but over the long term, you expect to include your long communication services like for mobile data centers or things like that as the becomes feasible in the you know in the decade. Yeah, I’ll try to address as many of those questions as I can. You know, I am very bullish about Amazon Leo and the opportunity there. There are billions of people around the world who don’t have access to broadband connectivity, and there are many thousands of businesses and government assets that just that people don’t have as a ability to because they don’t have the right connectivity. It means that those those entities can’t do a lot of things that we all take for granted today, including education online, business online, shopping online, entertainment online, having customers ability digital tools, all these things that they can’t do today. And so, we think that Amazon Leo is going to help solve that problem. I think when we launch our service.
Commercially, we’ve got, you know, we just had another launch this week. We have over 250 satellites in space. We launched a service commercially. It will be one of two offerings that are on the current technology edge. And I think that we will have meaningful advantage for governments. I think will be two times better on the downloading than just single turners, about six times better on the uploading performance than just single turners. I think we’ll we’ll have a cost advantage for customers, and then for the governments and enterprises. We talked a lot about that. We have signed agreements with many, even though we haven’t launched a service commercially. You know, the latest of which was with Star Alliance, um, committing and we have there starting in 2028. When you talk about another really big part of what matters, they’re going to want to just stay the office satellite constellation, and they’re going to want to store and they’re going to want to do analytics on it, and they’re going to want to do AI and just the combination of with the leading cloud world leaders is very compelling to enterprises and governments. So, you know, I think the only, you know, today, if you ask what’s offices for growing the business, we we have to get the constellation to space. We have over 20 launches planned this year. We have over 30 launches planned in 2027. But I think the business has a chance to be very large, you know, many billion dollar revenue business. And I think it has characteristics of revenue business that is capital intensive. Where you’re you’re committing a lot of capital and cash in early years for assets to get delivered over a long period time. So, I I like the free cash flow return on invested capital characteristics of business in the medium to long term. You know, and the last thing I’ll say about it is, you know, your question about global star. You know, increasingly what we’re finding with with consumers and enterprises, governments that they don’t like have any periods where they don’t have connectivity. It just affects whatever customers doing. They they’re going through even metropolitan areas. We all have certain parts of highways where you know or or certain roads where you can’t get connectivity or you’re hiding, you’re skiing, and so increasingly we see very large demand for for consumers to have direct device, and that was really the impetus for acquisitions of global star. They have unusual scale, global spectrum that requires direct device. We also really like the satellite network that we get as part of that merger with global star, and then also for the opportunity to build the relationships with Apple, who’s going to use our direct device for their iPhones and for their watches. So, very optimistic about the business. And next question comes from the line of Colin. Thanks for that. With Wolfrey, please proceed with your question. Okay, thanks a lot for taking my question. I wonder if you could please talk about, you know, how do you think about the increase in price for memory storage versus the light inflation we’re seeing in the impact with having, uh, this year and potentially next year as well, and on the general commerce. If you could talk about how you view the opportunity with advertising, you know, that that could be the best thing since um available over time. What for advertising opportunities? How do you view the agents would be the ones taking action? Um, good shot. Thanks a lot. So on memory storage and supply chain, I think everybody knows the cost of these components for the memory is skyrocketing, and we’re just stage where this just not enough supply for the massive demand. We have worked very closely with our strategic partners. We saw this trend happening early, you know, in the kind of middle layer part last year. We worked with our strategic suppliers here to get, you know, significant amounts of supply, and so we’re working very closely with them. I think teams are very scrappy. I think we’ve done a good job making sure that we’re not capacity constrained. We’re watching very closely. You know, the interesting thing that we see right now with the change in price and in supply on things like memory is that it is further impetus pushing companies to have enterprises infrastructure into the cloud. It’s the cost meaningful part. The suppliers are prioritizing their very large customers, which cloud providers are. And so we have seen a number of conversations we’ve had with enterprises for many months where it’s just slower in getting the transmission plans to move the products. So rapidly, just we have a lot more supply than what others have. So the interesting thing about the volume over time could have, you know, we’re we’re doing our best to kind of to have the supply we need in the right spot, but we’ll see how that continues to evolve. I think on the agent commerce and how that impacts advertising, I actually believe that we’re going to we’re going to like this advertising. I I think it’s going to be good for customers and it’s going to be good for our business. I think first of all, the first thing to remember is the way that our ads team has built tools and agents themselves that make it so much easier to do advertising. You know, if you look at small, medium-sized businesses, they have to take, you know, weeks months to do creative and to pick the right audience. All that is just it’s so much faster and so much easier because of advertising tools. And you know, we’re having to take much more spend and much money building the creative. So I think we’re going to be a lot more advertising advertisers with the rise of what’s happening in AI. And if if you look at the agent commerce experiences, you’re looking at these agent experiences, they tend to be multi-turn conversations where you know interacting with one source and getting an answer. You you find that asking questions, narrowing questions, asking you questions on what you want. And you know, in that process of having multi-turns, there are multiple opportunities to serve relevant products to customers. You know, many which will be organic, some which will be sponsored, and you know, it also gives rise to opportunities like sponsored prompts. So one interesting thing that has been very successful for customers in our store has been when they ask their questions, we give them a number of suggestions that are all created to AI, and we’ve we you know we’ve got pretty good also having sponsored prompts that make some questions and prompts that they can use for people to dig deeper into what they’re interested. So I actually believe that that advertising will do well in the world of agent commerce. Thank you. And our final question comes from the line of Colin Sebastian. With Barrett, please proceed with your question. Thanks very much. I could ask maybe a few part very if I could. Any first off, just what are we are seeing internally across Amazon’s business? Presumably, those are all very different internal players. Maybe maybe anything could contextualize. We’re seeing the most opportunity with the technology internally, both in terms of products, as well as maybe driving more operating efficiency. I think I think that would be helpful. Thank you. Yeah. So the um what we see in incremental AI demand for early adopters versus broader enterprise base, it it is I think a no secret that you’ve got, you know, the AI lab spending incredible amount of money on compute at this point, and compute both on the AI side, as well as the course side, and the models that they’re building, and the the companies have successful generative applications are certainly spending a lot. And you know, there’s several those labs, but we also see quite a bit of enterprise adoption usage of AI. You know, as I’ve said before, the largest absolute place that we see enterprises having success in projects, you know, around cost savings and productivity, these things like automating customer service, business process automation, fraud things like that. But the number of projects that we’re working with across enterprises, and we’re now starting to see the production around brand new experiences, trying to figure out how to reinvent their current experiences, but using inference AI to be smart.
Also very significant. So we’re we’re seeing the adoption of those those segments on the use of AI internally. You know, in in our our current businesses, I think that you know the shortest first summary I could give you, Colin, is that I do not see a place in any of our businesses or any of the ways that we do work where we’re not going to have giant impact on what we do. You know, I think, you know, I’ve long had this belief that while you can add incrementally to a lot of your existing customer experiences, different agentic AI experiences, I really believe that you know that in the in the fullness of time, and I know that’s three years from now or five years from now, or it could be sooner too, that all of these customer experiences we do, we know, are going to be completely reinvented, and they’re going to have different interfaces, they’re going to have different ways that people interact with them, they’re going people going to want to have dialogue with them. And so I think it means that you have to look. You know, it’s tricky for if you have an existing business that’s doing well, but you have to look at every single one of your customer experiences, and you have to be able to carve off resources for that team to think and do about what would future customer experience look like if you start from scratch today. And if you had all the technologies like AI available to you when you start, and that is what we’re doing in every single one of our experiences. And if I, you know, I have a chance to involve some of those, and there it’s really exciting. And you know, there are experiences that may take a while for customers to to get used to and to use over time. You might find different segments like those AI forward experiences more than others early on. But if you’re not actually working on inventing those right now, I think it’s going to be very hard to to have the business and the experience leadership that we want over long periods of time. So every single one of our consumer businesses, every single one of our businesses generally is working on that. And then I would say internally, I also think that it’s going to radically change how we work. It already is. I mean, just look at look at how coding, agentic coding is changing how we’re all building products. I think it’s going to have a comparable impact on how we do devops and how we do customer service, how we do research, how we do analytics, you know, how sales is conducted. I think every single one of these functions that we all do at work are going to very significantly change. And that’s another area of real focus for us. And you know, we have this experience I mentioned in my letter, but you know, if you look at one of our services, we swap out the engine of the service while we are, you know, also running the service full tilt. And normally that would have taken forty or fifty people about a year to do, and we we took five really smart people, AI forward thinking people, building agentic coding tools, and those five people rebuilt it in sixty five days. Like that that is a very different world of operating, and that’s the world I think we’re heading to over the next few years. Thanks for joining us on the call today and for your questions. A replay will be available on our investor relations website for at least three months. We appreciate your interest in Amazon and look forward to talking with you again next quarter.
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