The news: Amazon’s advertising business experienced another strong quarter, with advertising services up 24% YoY to $17.2 billion. The company’s net sales grew 17% to $181.5 billion, in line with analyst expectations.

Free cash flow decreased to $1.2 billion for the trailing twelve months, which Amazon said was driven by a $59.3 billion YoY increase in purchases of property and equipment, net of proceeds from sales and incentives, reflecting increased investments in artificial intelligence. That was down from $25.9 billion for the trailing twelve months ended March 31, 2025.

In Q1, the company expanded its relationships with OpenAI and Anthropic, both of which agreed to rely on Amazon Web Services’ cloud infrastructure and chips over the course of several years.

Behind Amazon’s ad growth: We forecast Amazon’s overall US ad revenues will reach $56.77 billion this year, increasing 18.1% YoY; double-digit growth will continue through 2028. Consistently strong results carrying into Q1 can be boiled down to a few key, AI-forward strategies and innovations:

• Amazon has launched and rebranded several AI-powered ad products, including Campaign Manager, which merges its Ads Console and DSP for full-funnel campaigns; Ads Agent, an AI assistant that can manage campaigns across accounts; and Creative Agent, a rebrand of its Creative Studio to generate streaming campaign material.
• The company’s tools offer full-funnel capabilities that leverage agentic AI to create and run multichannel campaigns, beginning with streaming at the top of the funnel and converting on a brand’s site or via sponsored Amazon ads.