Key Highlights
- CEO Andy Jassy rejected concerns about an AI investment bubble in his latest shareholder letter
- AWS AI business now operates at over $15 billion annualized revenue, accounting for approximately 10% of total AWS income
- Amazon’s in-house chip division has expanded to a $20 billion annual run rate, doubling previous figures
- The chip unit could potentially reach $50 billion in revenue if sold externally — matching Broadcom’s AI chip operations
- Company plans $200 billion capital expenditure for 2026, primarily focused on AI infrastructure
In his latest annual shareholder communication, Amazon CEO Andy Jassy forcefully rejected concerns that artificial intelligence investments have spiraled into unsustainable territory.
“My strong conviction, at least for Amazon, is that the answers are no, no, and yes,” Jassy stated, addressing questions about AI hype, bubble risks, and return on investment potential.
Thursday’s letter marked a milestone as Amazon publicly disclosed specific AWS AI revenue metrics for the first time. The division is currently operating at more than $15 billion in annualized revenue, calculated from first-quarter results.
This represents roughly 10% of AWS’s total $142 billion revenue run rate. Market watchers and financial analysts had long anticipated this transparency.
According to Jassy, AI revenue is “ascending rapidly” and AWS growth would be even more aggressive without industry-wide capacity limitations.
The company has allocated $200 billion for capital expenditure this year, with the majority targeting AI infrastructure development. This substantial investment initially concerned investors and sparked discussions about potential industry-wide overspending.
Jassy addressed these worries directly. “We’re not investing on a hunch,” he explained, noting that Amazon has already secured customer commitments covering a significant portion of the 2026 AWS capex budget.
Semiconductor Division Experiences Explosive Growth
Perhaps the most notable revelation in the shareholder letter concerned Amazon’s proprietary semiconductor operations. The division — encompassing Trainium AI processors, Graviton chips, and Nitro networking components — has doubled its annualized revenue to surpass $20 billion.
This represents significant growth from the $10 billion metric Amazon reported with its fourth-quarter earnings.
Jassy elaborated further, explaining that if Amazon marketed all internally produced chips to external customers this year, the division could potentially generate $50 billion in annual revenue.
To put this in perspective, Broadcom’s AI semiconductor business is projected to generate approximately $10.7 billion this quarter. Broadcom currently maintains a $1.66 trillion market capitalization, driven substantially by this segment.
External Chip Sales Being Considered
Jassy suggested that Amazon might eventually offer chips directly to external purchasers, creating competition with Nvidia and Broadcom — companies from which Amazon currently sources components.
“There’s so much demand for our chips that it’s quite possible we’ll sell racks of them to third parties in the future,” he indicated.
Google has already explored similar territory. Last October, the company announced an agreement to provide Anthropic with one million custom AI processors, a deal valued in the tens of billions.
Reuters previously reported that Jassy informed an internal gathering that AWS could ultimately achieve $600 billion in annual revenue — twice his previous projection — fueled predominantly by AI services.
Amazon has simultaneously reduced its workforce by approximately 30,000 positions in recent months, eliminating underperforming divisions and adjusting pandemic-era staffing levels.
Amazon shares traded up approximately 1.5% in premarket activity following the shareholder letter’s publication.
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