Key Points
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Amazon’s in-house chip business has topped a $20 billion annual revenue run rate and is growing at triple-digit rates year over year.
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Customers have committed more than $225 billion in future revenue for the company’s Trainium chips.
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AWS revenue growth accelerated to 28% in the first quarter, its fastest pace in 15 quarters.
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Amazon (NASDAQ: AMZN) CEO Andy Jassy put a striking number on one of his company’s least-discussed businesses this spring. If Amazon’s in-house chip operation were a stand-alone company that sold the chips it produces to outside buyers, he said on the company’s first-quarterearnings callin April, its annual revenue run rate would be about $50 billion.
The business as it actually runs today is no small thing either. Amazon’s custom chip unit — Graviton processors, Trainium artificial intelligence (AI) accelerators, and Nitro networking chips, all deployed inside Amazon Web Services (AWS) — has an annual revenue run rate above $20 billion, growing at triple-digit percentage rates year over year.
And customers have lined up. Jassy said in the company’s first-quarterearnings callthat it now holds more than $225 billion in revenue commitments for Trainium.
Numbers like those suggest Amazon is building something bigger than an internal cost-saving project. Here’s a closer look at the chip business, and what it could mean for the stock.
A $20 billion business inside AWS
Amazon’s chips business grew nearly 40% quarter over quarter in the first quarter alone, Jassy said on theearnings call And as best the company can tell, he added, its custom silicon operation is now “one of the top three data center chip businesses in the world.”
The $225 billion commitment figure comes with recognizable names attached. Amazon’s first-quarter report disclosed a commitment from OpenAI to consume approximately two gigawatts of Trainium capacity beginning in 2027, and an agreement under which Anthropic will secure up to five gigawatts of current and future generations of Trainium chips. Uber is using Graviton chips to match riders with drivers. And Meta Platforms signed on to deploy tens of millions of Graviton cores.
Demand is running ahead of supply, too.
“Our Trainium2 chip has about 30% better price-performance than comparable GPUs, and has largely sold out,” Jassy said on the call. Trainium3, which started shipping at the beginning of 2026, is nearly fully subscribed. And much of Trainium4, still more than a year from broad availability, has already been reserved.
A challenger to Nvidia, within limits
Of course, Nvidia is still much bigger. Its graphics processing units (GPUs) dominate AI data centers, and Amazon itself remains a huge Nvidia customer — the same first-quarter report that touted Trainium also announced plans to deploy more than 1 million Nvidia GPUs starting in 2026.
Trainium’s selling point is cost per unit of computing, and Amazon offers its chips only through AWS.
Jassy’s $50 billion figure is also a hypothetical. It describes what the business would look like if Amazon sold its chips on the open market the way other chipmakers do, which today it mostly doesn’t. Amazon doesn’t break out the unit’s profits, either, so investors can’t yet see what all this silicon earns.
But the chip momentum sits inside a cloud business that is accelerating. AWS revenue grew 20% for all of 2025, then 24% in the fourth quarter, then 28% in the first quarter of 2026, reaching $37.6 billion — growth Jassy called the segment’s fastest in 15 quarters. AWS also produced $14.2 billion of operating income in the first quarter, up 23% from $11.5 billion a year earlier.
That growth is expensive. Amazon expects about $200 billion in capital expenditures across the company in 2026, and its free cash flow for the trailing 12 months fell to $1.2 billion from $25.9 billion a year earlier as AI investments ramped up.
The spending is the main risk here. If demand for AI computing cools before these investments pay for themselves, Amazon’s profits and its stock could suffer.
Still, the stock arguably isn’t asking investors to pay much for the chip business. At about $255 per share as of this writing, Amazon trades at about 30 times earnings, though earnings get a boost from a $16.8 billion pre-tax gain on the company’s Anthropic investment booked in the first quarter. Excluding it, the multiple would be somewhat higher. Even so, shares are up a modest 10% or so this year while AWS accelerates.
Ultimately, I don’t think Trainium needs to beat Nvidia for Amazon shareholders to win. A chip business with a $20 billion run rate, triple-digit growth, and $225 billion in commitments strengthens the case for a stock priced like this while its biggest profit engine accelerates. I already liked Amazon at this price. The chip business is one more reason.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Nvidia, and Uber Technologies. The Motley Fool has a disclosure policy.
