Amazon (AMZN) CEO Andy Jassy released his annual shareholder newsletter on Thursday, outlining the company’s approach to AI and indicating that Amazon is thinking about selling its own AI processors to third parties, increasing competition with Nvidia (NVDA) and AMD (AMD).
Jassy said he doesn’t believe the technology is either overhyped or a bubble, but rather that margins and returns on capital invested will be “appealing.” His convictions, he said, stem from how quickly AI is being adopted and the rapid increase in revenue for Amazon’s AWS unit.
According to Jassy, AWS’s AI revenue has a run rate of more than $15 billion as of Q1 2026 and continues to grow. What’s more, he said the business could be growing faster, but the company is still capacity-constrained, despite adding 3.9 gigawatts of capacity in 2025 and its plans to double that by 2027.
Jassy said two large AWS customers have asked whether they can buy all of its custom CPU Graviton capacity in 2026. However, the company can’t agree to the move because it still needs to provide CPU capacity to its other customers.
The CEO also took a shot at Nvidia, saying that while Amazon continues to use that company’s chips, customers want better “price-performance.” That, Jassy said, is why Amazon’s custom AI GPU Trainium2 chip is sold out, while its Trainium3 is “nearly fully-subscribed” despite the fact that it started shipping at the start of 2026.
“Having our own hotly demanded AI chip opens up many possibilities, but perhaps none larger than the ability to lower costs for customers and secure better economics for AWS,” Jassy said. “At scale, we expect Trainium will save us tens of billions of capex dollars per year, and provide several hundred basis points of operating margin advantage versus relying on others’ chips for inference.”
Read more: Best credit cards for shopping on Amazon for April 2026
According to the chief executive, Amazon’s chip business has an annual revenue run rate of $20 billion and is growing at triple-digit percentages year over year. But Jassy said that amount is understated because it only monetizes its chips through its AWS EC2 service.
If it were a standalone business, he said, Amazon’s chip revenue would have a run rate of roughly $50 billion.
“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,” Jassy said.
None of Amazon’s AI work comes cheap, though. In February, the company revealed plans to spend $200 billion on capital expenditures in 2026 alone as part of its build-out. Amazon stock is off 7% since the announcement.
