Runnymede's Andy Wang appeared on Schwab Network's The Watch List with host Diane King Hall to discuss Amazon's Q1 2026 earnings, which delivered the kind of results that validate patient shareholders.
Joining CFRA Research analyst Arun Sundaram, Andy broke down why this quarter marks a turning point for the e-commerce and cloud giant.
The Numbers That Matter
Amazon posted earnings per share of $2.78, beating expectations by 70%. The company achieved a record 13.1% operating margin while simultaneously spending $43 billion in capital expenditures during the quarter.
But the real headline was AWS.
“Growth accelerated to 28% year-over-year—the fastest in nearly four years,” Andy noted. “The last time AWS grew this fast, the business was half the size. Growing 28% on a $150 billion annual run rate is extraordinary.”
AWS reported Q1 revenue of $37.6 billion, marking its fastest growth in 15 quarters.
The Custom Silicon Story
When host Diane King Hall asked about Amazon's chip business, Andy highlighted a development that many investors are underestimating.
“Amazon's custom chip business is now running at a $20 billion annual rate, growing 40% quarter-over-quarter,” Andy explained. “If you measured it like other chip companies—selling to both internal and external customers—it would be a $50 billion business. That makes it one of the top three data center chip businesses in the world.”
The implications for margins are significant. Amazon's Trainium chips offer approximately 30% better price performance than comparable GPUs. The company expects this advantage to save tens of billions in annual capex and provide several hundred basis points of margin improvement versus relying on third-party chips.
“Amazon said they'll always have customers who want NVIDIA, and they remain deep partners,” Andy added. “But Trainium captures the price-sensitive inference workloads at scale—and that's where the volume growth is heading.”
The Setup Going Forward
Andy pointed to several factors that make Amazon's positioning compelling: easier earnings comparisons ahead, a multi-year AWS growth story, and institutional positioning that remains underweight the stock.
“Amazon spent most of 2025 as one of the laggards among mega-cap tech, even though AWS had the capacity positioned to grow cloud revenue this year,” Andy said. “Now we have the proof.”
