TLDR
- Amazon CEO Andy Jassy dismissed AI bubble fears in his annual shareholder letter, saying revenue is already coming in.
- AWS AI services hit an annualized revenue run rate of over $15 billion in Q1 2026.
- Amazon’s custom chip business â including Trainium and Graviton â now has an annualized revenue run rate of over $20 billion, doubling from $10 billion.
- Jassy said Amazon could sell chip racks to third parties, potentially generating $50 billion in annual chip revenue.
- AMZN stock rose 5.6% to $233.65 on Thursday, its biggest single-day gain since October 31, 2025.
Amazon CEO Andy Jassy used his annual shareholder letter to answer critics head-on. The letter, published Thursday, pushed back against claims that Big Tech’s AI spending is out of control â and the market responded.
AMZN stock climbed 5.6% to $233.65 on Thursday. That was its best single-day performance since October 31, 2025, when it jumped 9.58%. It also topped the Dow Jones leaderboard for the day.
Jassy’s letter covered a lot of ground, but two numbers stood out: $15 billion and $20 billion.
AWS AI services are generating an annualized revenue run rate of over $15 billion, based on first-quarter performance. That’s the first time Amazon has put a specific number on the business. For context, Microsoft said in January its AI business had crossed $13 billion in annualized run rate in late 2024.
The figures aren’t directly comparable â run-rate metrics depend on when they’re calculated â but both show AI spending at the big cloud platforms is turning into real revenue.
AWS Has the Customer Commitments to Back It Up
Amazon has projected $200 billion in capital expenditure for 2026, most of it going toward AI data centers. That figure rattled some investors earlier this year.
Jassy pushed back. “We’re not investing on a hunch,” he wrote. He said a substantial portion of AWS’s 2026 capex already has customer commitments behind it, with much of the spending expected to be monetized in 2027 and 2028.
“Of the AWS capex we expect to spend in 2026, much of which will be monetized in 2027-2028, we already have customer commitments for a substantial portion of it,” Jassy wrote.
Brian Mulberry, chief market strategist at Zacks Investment Management, called the AI run-rate figure “a strong validation that AWS is successfully turning the AI boom into real, high-growth revenue.”
The $200 billion capex plan outpaces spending from Microsoft and Alphabet for the year.
Amazon’s Chip Business Could Rival Nvidia and Broadcom
The other headline in Jassy’s letter was about chips. Amazon’s in-house chip unit â covering Trainium AI chips, Graviton processors, and Nitro networking cards â now has an annualized revenue run rate of over $20 billion. That’s up from $10 billion disclosed alongside Q4 results, a doubling in a short period.
Jassy went further, saying that if Amazon sold those chips to outside customers, that business alone could generate $50 billion a year. “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 wrote.
If that happens, Amazon would be going head-to-head with Nvidia and Broadcom in the AI chip market. Broadcom’s AI chip business is expected to generate around $10.7 billion in the current quarter alone. Broadcom’s market cap sits at $1.66 trillion, largely driven by its semiconductor business.
Amazon is already in talks with OpenAI. The company pledged a $50 billion investment in the ChatGPT developer, with OpenAI set to buy billions in Amazon AI chips as part of the deal.
Jassy described chips as a potential “new pillar for Amazon.”
Amazon’s market cap stands at approximately $2.38 trillion.
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