Amazon's Chip Business Surges Past $20B

Amazon CEO Andy Jassy revealed that the company's in-house chip division is experiencing explosive growth, with a nearly 40% quarter-over-quarter increase in Q1. This surge has pushed the annual revenue run rate past $20 billion, a figure that Jassy suggests significantly understates the business's true scale.

If Amazon were to treat its custom silicon operations as a standalone entity, selling chips to both AWS and third parties, the annual run rate would approach $50 billion. This rapid ascent has positioned Amazon's custom silicon business as one of the top three data center chip providers worldwide.

Amazon Trainium AI silicon Gains Traction

The company is seeing substantial adoption for its custom AI silicon, particularly the Amazon Trainium AI silicon. Major players like Anthropic and OpenAI have made significant, multi-year commitments for Trainium, alongside growing interest from companies such as Uber. These commitments now total over $225 billion.

Trainium2 chips offer a 30% price-performance advantage over comparable GPUs and are largely sold out. Trainium3, which began shipping in early 2026, provides a further 30-40% improvement and is nearly fully subscribed, with substantial reservations already placed for Trainium4, expected in about 18 months.

Amazon Bedrock, a service used by over 125,000 customers, leverages Trainium for most of its inference tasks. Nearly 80% of Fortune 100 companies utilize Bedrock.

Graviton CPUs Powering Agentic AI

Beyond AI accelerators, Amazon's Graviton CPUs are also seeing significant adoption. Meta has committed to using tens of millions of Graviton cores for CPU-intensive agentic AI workloads. This reflects the increasing demand for powerful CPUs as AI systems evolve from answering questions to performing actions.

Graviton chips deliver up to 40% better price-performance than competing x86 processors. They are now utilized by 98% of the top 1,000 EC2 customers, underscoring their widespread acceptance for demanding tasks. The adoption of Amazon Graviton chips highlights Arm's AI chip ambitions taking center stage.

AWS claims it offers the best chip portfolio for both AI and CPU workloads with its Trainium and Graviton offerings, positioning it strongly for the current AI inflection. This comprehensive chip strategy was detailed in Amazon's first quarter earnings report.