By Daniel Howley

Amazon (AMZN) will report its first quarter earnings alongside rivals Google (GOOG, GOOGL), Meta (META), and Microsoft (MSFT) on Wednesday, with investors looking for more signs that the company’s massive artificial intelligence spending is paying off.

All totaled, the AI hyperscalers are expected to spend a whopping $650 billion in capital expenditures in 2026, and Amazon will account for $200 billion of that.

Despite that, Wall Street has been largely positive on Amazon, with the stock of the cloud and e-commerce giant up 13% year to date. That’s better than Google’s 12% increase, and well ahead of Microsoft, which is down 12%.

Amazon, however, is also dealing with increased shipping costs due to rising fuel prices, which could impact e-commerce revenue in the quarter.

According to Morgan Stanley’s Brian Nowak, a downside scenario in fuel costs could create a $4 billion headwind for Amazon, even when accounting for fuel surcharges. His base model sees $600 million and $2 billion in costs in the first and second quarters, respectively, and assumes that Amazon will find offsets in the second half of the year.

Amazon CEO Andy Jassy speaks during an Amazon Devices launch event in New York City, U.S., Feb. 26, 2025. REUTERS/Brendan McDermid/File Photo

For the quarter, Amazon is expected to report earnings per share (EPS) of $1.62 on revenue of $177.2 billion, according to Bloomberg analyst consensus estimates. The company saw earnings per share of $1.59 and revenue of $155.6 billion in Q1 last year.

Amazon’s e-commerce segment is expected to come in at $62.65 billion, while its advertising business is projected to generate $16.89 billion, a 21% year-over-year improvement.

The company’s Amazon Web Services (AWS) revenue is estimated to be $36.79 billion, up 25% from the same period last year.

Investors will be especially interested in Amazon’s remaining performance obligations (RPOs), or contracts the company has signed with customers but hasn’t yet been paid for.

In Q4, Amazon said it has RPOs of $244 billion. The number provides Wall Street with a sense of how much demand Amazon is seeing for its cloud platform and how much of that it’s able to serve.

Earlier this month, CEO Andy Jassy wrote in his annual shareholder newsletter that AWS’s AI revenue has a run rate of more than $15 billion as of Q1 2026 and continues to grow. What’s more, he said the business could be growing faster, but the company is still capacity-constrained, despite adding 3.9 gigawatts in 2025 and plans to double that by 2027.