10-Q filed 2026-07-31

Item 2 of Part I, “Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.” Interest Rate Risk Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our debt.

Our long-term debt primarily bears interest at fixed rates and is carried at amortized cost and fluctuations in interest rates do not impact our consolidated financial statements.

We generally invest our excess cash in investment grade short- to intermediate-term marketable debt securities and AAA-rated money market funds.

Foreign Exchange Risk During Q2 2026, net sales from our International segment accounted for 21% of our consolidated revenues.

The results of operations of, and certain of our intercompany balances associated with, our internationally-focused stores and AWS are exposed to foreign exchange rate fluctuations.

We have foreign exchange risk related to foreign-denominated cash, cash equivalents, and marketable securities (“foreign funds”).

We also have foreign exchange risk related to our intercompany balances denominated in various currencies.

As of June 30, 2026, we have designated $20.7 billion of our Euro- and Canadian Dollar-denominated Notes as net investment hedges to mitigate foreign currency exposures related to the translation of our investments in foreign operations to U.S.

Foreign currency unrealized gains and losses on these notes are included in “Accumulated other comprehensive income (loss)” until the foreign operations are sold or substantially liquidated, at which point these amounts and any translation adjustment of the foreign operations are reclassified to our consolidated statements of operations.

See Item 2 of Part I, “Management's Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Effect of Foreign Exchange Rates” for additional information on the effect on reported results of changes in foreign exchange rates.

Equity Investment Risk As of June 30, 2026, our recorded value in equity, equity warrant, and convertible debt investments in public and private companies was $229.7 billion.

Our equity and equity warrant investments in publicly traded companies represent $7.4 billion of our investments as of June 30, 2026, and are recorded at fair value, which is subject to market price volatility.

We record our equity warrant investments in private companies at fair value and adjust our equity investments in private companies, which primarily relate to our equity investments in Anthropic and OpenAI, for observable price changes or impairments.

As such, we believe that market sensitivities are not practicable.

36 Table of Contents We carried out an evaluation required by the Securities Exchange Act of 1934 (the “1934 Act”), under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the 1934 Act, as of the end of the period covered by this report.

Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

During the most recent fiscal quarter, there has not occurred any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud.

Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met.

Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

OTHER INFORMATION See Item 1 of Part I, “Financial Statements — Note 4 — Commitments and Contingencies — Legal Proceedings.” Please carefully consider the following discussion of significant factors, events, and uncertainties that make an investment in our securities risky.

In addition to the factors discussed in Item 7 of Part II, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and in the risk factors below, global economic and geopolitical conditions and additional or unforeseen circumstances, developments, or events may give rise to or amplify many of the risks discussed below.

The disclosures in this section reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future.

References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past.

Business and Industry Risks We Face Intense Competition Our businesses are rapidly evolving and intensely competitive, and we have many competitors across geographies, including cross-border competition, and in different industries, including physical, e-commerce, and omnichannel retail, e-commerce services, web and infrastructure computing services, electronic devices, digital content, advertising, grocery, healthcare, communications, and transportation and logistics services.