Key Highlights
- Andy Jassy refuted concerns about an AI investment bubble in his yearly shareholder communication, emphasizing that actual revenue is already being realized.
- AWS’s artificial intelligence services reached an annualized revenue run rate exceeding $15 billion during the first quarter of 2026.
- The company’s proprietary chip division — featuring Trainium and Graviton products — achieved an annualized revenue run rate surpassing $20 billion, representing a twofold increase from $10 billion.
- The CEO suggested Amazon might distribute chip racks to external clients, which could yield $50 billion in yearly chip-related revenue.
- AMZN shares jumped 5.6% to reach $233.65 on Thursday, marking the largest single-session increase since October 31, 2025.
In his yearly communication to shareholders, Amazon CEO Andy Jassy directly confronted skeptics. The statement, released Thursday, challenged assertions that major technology companies are overspending on artificial intelligence infrastructure — and investors took notice.
Shares of AMZN advanced 5.6% to settle at $233.65 on Thursday. This represented the stock’s strongest daily showing since October 31, 2025, when it surged 9.58%. The performance also placed it atop the Dow Jones rankings for the session.
While Jassy’s communication addressed numerous topics, two revenue figures captured particular attention: $15 billion and $20 billion.
Amazon Web Services’ AI offerings are producing an annualized revenue run rate exceeding $15 billion, according to first-quarter data. This marks the initial instance Amazon has disclosed a concrete figure for this segment. By comparison, Microsoft announced in January that its AI operations had surpassed $13 billion in annualized run rate during late 2024.
While these metrics aren’t perfectly comparable — run-rate calculations vary based on timing — both demonstrate that AI infrastructure investments at leading cloud providers are generating tangible income.
Customer Commitments Support AWS Investment Strategy
The company has outlined $200 billion in capital spending for 2026, with the majority allocated to AI data center infrastructure. This substantial amount created concern among some shareholders earlier in the year.
Jassy addressed these worries directly. “We’re not investing on a hunch,” he stated. He explained that a significant share of AWS’s 2026 capital expenditure is already backed by customer agreements, with most spending anticipated to generate returns 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.
According to Brian Mulberry, chief market strategist at Zacks Investment Management, the AI run-rate number represents “a strong validation that AWS is successfully turning the AI boom into real, high-growth revenue.”
The $200 billion investment blueprint exceeds the spending plans from Microsoft and Alphabet for the same period.
Custom Chip Division Could Challenge Nvidia and Broadcom
Another major revelation in Jassy’s communication involved semiconductors. Amazon’s internal chip operation — encompassing Trainium AI processors, Graviton chips, and Nitro networking components — has achieved an annualized revenue run rate exceeding $20 billion. This represents a doubling from the $10 billion figure shared with Q4 earnings, showing rapid expansion in a brief timeframe.
Jassy expanded on this potential, indicating that if Amazon marketed these semiconductors to external buyers, the operation could independently produce $50 billion annually. “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 stated.
Should this materialize, Amazon would directly compete with Nvidia and Broadcom in the AI semiconductor arena. Broadcom’s AI chip division is projected to produce approximately $10.7 billion in the current quarter alone. Broadcom’s valuation currently stands at $1.66 trillion, primarily fueled by its semiconductor operations.
Amazon has already initiated discussions with OpenAI. The e-commerce giant committed to a $50 billion investment in the developer of ChatGPT, with OpenAI agreeing to purchase billions in Amazon AI processors as part of the arrangement.
Jassy characterized the chip business as a prospective “new pillar for Amazon.”
Amazon’s current market capitalization is roughly $2.38 trillion.
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