Key Takeaways
- CEO Andy Jassy rejected concerns about an AI investment bubble in his latest shareholder letter
- AWS’s artificial intelligence division now produces more than $15 billion in yearly revenue, approximately 10% of total AWS sales
- The company’s proprietary chip division has expanded its annual run rate to exceed $20 billion, a 100% increase
- According to Jassy, selling chips to external customers could push the division to $50 billion — rivaling Broadcom’s AI semiconductor operations
- The e-commerce giant plans $200 billion in capital investments for 2026, primarily targeting AI infrastructure
In his latest annual communication to shareholders, Amazon CEO Andy Jassy mounted a vigorous defense against critics claiming 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 concerns about AI hype, bubble risks, and whether the investment returns would justify the spending.
Released on Thursday, this shareholder communication marked the first occasion Amazon has publicly quantified its AWS artificial intelligence revenue stream. The division is currently producing over $15 billion in annualized sales, calculated from first-quarter metrics.
This number accounts for roughly 10% of AWS’s total $142 billion annual revenue rate. The disclosure answers questions that market observers and financial analysts have been asking for several years.
According to Jassy, AI-related revenue is “ascending rapidly,” and AWS growth would accelerate even further without the widespread capacity limitations affecting the entire sector.
The tech giant has earmarked $200 billion for capital spending this year, with the majority allocated to AI-focused infrastructure. This substantial investment figure unsettled market participants earlier in the year and sparked widespread discussion about potential industry overinvestment.
Jassy directly addressed these concerns as well. “We’re not investing on a hunch,” he explained, noting that Amazon has already secured customer agreements covering a substantial portion of AWS capital expenditures scheduled for 2026.
Proprietary Semiconductor Division Sees 100% Growth
Among the most noteworthy revelations in the communication was information regarding Amazon’s proprietary semiconductor operations. This division — encompassing Trainium artificial intelligence processors, Graviton server chips, and Nitro network accelerators — has experienced a doubling of its yearly revenue run rate, now surpassing $20 billion.
This represents significant expansion from the $10 billion benchmark Amazon revealed during its fourth-quarter earnings announcement.
Jassy elaborated further, suggesting that if Amazon redirected all internally manufactured chips to external markets this year, the semiconductor unit could potentially achieve $50 billion in yearly revenue.
To put this in perspective, Broadcom’s artificial intelligence chip operations are projected to deliver approximately $10.7 billion this quarter alone. Broadcom commands a market capitalization of $1.66 trillion, powered substantially by that semiconductor business.
External Chip Sales Under Consideration
Jassy suggested Amazon might eventually market its semiconductors directly to third-party purchasers, positioning the company as a competitor to Nvidia and Broadcom — ironically, two suppliers Amazon currently purchases from.
“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 experimented with a comparable approach. Last October, the search giant negotiated an agreement to provide Anthropic with one million custom AI processors, representing a contract valued at tens of billions of dollars.
Reuters additionally disclosed last month that Jassy communicated to an internal gathering that AWS might ultimately reach $600 billion in yearly revenue — twice his previous projection — propelled primarily by artificial intelligence demand.
Amazon has also eliminated approximately 30,000 positions in recent months, streamlining underperforming divisions and adjusting workforce levels from pandemic-era expansion.
Amazon shares advanced roughly 1.5% in pre-market activity following publication of the shareholder letter.
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