Amazon's Jassy says AI revenue run rate is over $15 Bln, hints at future chip sale

Investing.com -- Amazon’s chief executive officer, Andy Jassy, in a letter to shareholders on Thursday, said that Amazon’s AI services at its cloud-computing unit are generating annualized revenue of more than $15 billion in the first quarter of 2026, easing some investor worries around increased company spending billions of dollars in its AI push.

Shares in the company rose 2% in pre-market hours of trading.

Amazon, like its competitors, faces pressure to demonstrate that its AI investments will yield results. In February, the e-commerce giant projected its capital expenditures would reach $200 billion this year, primarily targeting AI development and infrastructure—a number that unsettled investors and raised concerns about a potential industry bubble.

“We are willing to make large capex investments and endure short-term FCF headwinds for the substantial medium to long-term FCF surplus. AI is a once-in-a-lifetime opportunity where the current growth is unprecedented and the future growth even bigger,” Jassy said.

This is the first time the technology giant has disclosed numbers for a business it has backed with a major investment to compete with its immediate rivals, such as NVIDIA Corporation (NASDAQ: NVDA), Microsoft Corporation (NASDAQ: MSFT), and Alphabet Inc Class A (NASDAQ: GOOGL) Google.

Citron Research, in an X post, said, ‘Too compelling not to comment on Amazon,’ and set a $300 price target on the stock.

Jassy also said that Amazon’s custom chip business is growing rapidly, as large tech firms are starting to make their own chips to reduce dependence on chipmakers like Nvidia.

The letter said that the company’s chip business, which includes Graviton processors, Trainium AI chips, and Nitro networking cards, has doubled its annualized revenue run rate to over $20 billion, up ​from the $10 billion the company disclosed alongside its fourth-quarter results.

Citron said that Amazon’s chip business is “another trillion-dollar company hidden inside Amazon”.

“If our chips business was a stand-alone business, and sold chips produced this year to AWS and other third parties (as other leading chips companies do), our annual run rate would be ~$50 billion”.

Jassy also hinted towards future chip sales to other firms by saying that “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”.

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