Amazon CEO Andy Jassy announced plans to potentially sell custom AI processors to third parties, signaling a major competitive shift against chipmakers like Nvidia and AMD in the market.

Key Points

• Amazon’s AWS AI revenue reached a $15 billion run rate in Q1 2026, with the company’s internal chip business generating an estimated $20 billion annually.
• The company plans to double its data center capacity by 2027 after adding 3.9 gigawatts of power in 2025.
• Amazon’s custom Trainium2 chips are currently sold out, while the newer Trainium3 model is nearly fully subscribed by customers seeking better price-performance.
• Jassy estimates that scaling internal chip production could save Amazon tens of billions of dollars in annual capital expenditures.
• Amazon has committed to $200 billion in capital expenditures for 2026 to support its ongoing infrastructure and AI hardware expansion.

Why it Matters

Amazon’s move to potentially sell its proprietary chips directly to third parties challenges the dominance of established hardware providers like Nvidia and AMD. This strategy aims to improve AWS operating margins while providing customers with more cost-effective alternatives for high-performance computing.