Amazon’s chip business hits $20 billion annual revenue run rate

Amazon CEO Andy Jassy announced in his annual shareholder letter that the company’s chip business has reached a $20 billion annual revenue run rate (ARR). Jassy postulated that if Amazon were a chipmaker selling its hardware to other companies, its ARR would be at $50 billion. For comparison, competitor Nvidia reported $215.9 billion in actual revenue last year. This chip milestone anchors a broader infrastructure strategy, which includes plans to spend $200 billion in 2026 on capital expenditures (capex). The spending plan, announced in February, comes as Amazon seeks to support artificial intelligence workloads and reassure shareholders after its stock price fell below $200 a share.

A central focus of Jassy’s strategy is reducing reliance on other chipmakers. While Jassy stated that Amazon has a strong partnership with Nvidia and will always have customers who choose to run Nvidia chips, he noted a shift in the market. Jassy wrote that while virtually all AI has been done on Nvidia chips up to this point, a new shift has started. Amazon is positioning its proprietary Trainium AI chips to meet this demand. Capacity for the Trainium3 chip is nearly sold out, and capacity for the Trainium4 chip is also nearly sold out, despite being 18 months away from availability. Additionally, Amazon’s proprietary Graviton CPU, which competes with Intel’s architecture, is now used by 98% of the top 1,000 Elastic Compute Cloud (EC2) customers.

To justify the planned $200 billion capex, Jassy pointed to committed customer demand, including a pledge from OpenAI to spend $100 billion on AWS. “We’re not investing approximately $200 billion in capex in 2026 on a hunch,” Jassy wrote, pointing to this and other customer agreements. Beyond AI chips, Amazon is also investing in its satellite internet service, Amazon Leo, which is scheduled to launch in mid-2026. The service has already secured contracts with entities including:

• Delta Airlines
• AT&T
• Vodafone
• Australia’s National Broadband Network
• NASA

Additionally, Amazon is exploring future opportunities for its logistics technology, noting it may turn data from its 1 million warehouse robots into robotics solutions for industrial uses and consumers.

Why it matters

Jassy’s letter signals a massive, capital-intensive pivot toward vertical integration in AI hardware, positioning Amazon to compete directly with Nvidia and Intel while betting heavily on future cloud demand.