Amazon chips no longer just a side dish, they're a $20B biz (5 minute read)
Amazon's custom chip business has hit $20 billion in annual revenue, making it one of the top three datacenter chip companies globally with Trainium AI chips nearly sold out through 2027.
Deep dive
- Amazon's custom silicon business reached $20 billion in annual revenue run rate, or $50 billion if internal AWS usage were counted at market rates, making it one of the top three datacenter chip businesses globally
- The division includes Graviton ARM-based CPUs, Trainium AI training chips, and Nitro security processors, all growing at over 100% year-over-year
- Major AI companies are betting heavily on Amazon chips: Anthropic committed to 5 gigawatts of Trainium capacity, OpenAI to 2 gigawatts, with total revenue commitments exceeding $225 billion
- Trainium2 chips offer about 30% better price-performance than comparable GPUs and are largely sold out; Trainium3 (30-40% better than Trainium2) is nearly fully subscribed despite just shipping in early 2026
- Trainium4 is still 18 months from broad availability but already has much of its capacity reserved, indicating strong demand visibility through at least late 2027
- Meta partnered to deploy tens of millions of Graviton cores for agentic AI workloads, with Graviton4 delivering up to 40% better price-performance than x86 processors and now used by 98% of the top 1,000 EC2 customers
- The shift from training-focused to inference and agentic AI workloads is driving demand for CPUs rather than just GPUs, which Amazon argues favors its Graviton architecture
- AWS itself grew 28% year-over-year to $37.6 billion in Q1 2026, its fastest growth rate in 15 quarters, driven partly by AI demand
- Amazon's AI revenue run rate reached over $15 billion in the first three years of the current AI wave, compared to just $58 million for AWS in its first three years
- Amazon Bedrock processed more tokens in Q1 2026 than all prior years combined, with customer spending growing 170% quarter-over-quarter
- The company added OpenAI's GPT-5.4 to Bedrock in limited preview and announced GPT-5.5 is coming soon, alongside Anthropic's Claude Opus 4.7
- Amazon partnered with Cerebras to deliver what it claims are the fastest AI inference speeds for large language models through Bedrock
- Amazon's Q1 net income of $30.3 billion includes a $16.8 billion pre-tax gain from its Anthropic investment, significantly inflating the headline profitability number
Decoder
- Trainium: Amazon's custom-designed chips specifically built for training large AI models, competing with Nvidia GPUs
- Graviton: Amazon's ARM-based CPU processors designed for general cloud computing workloads with better power efficiency than x86 chips
- Nitro: Amazon's security-focused chips that handle virtualization and storage tasks in AWS datacenters
- Gigawatt (GW): A measure of power consumption; one gigawatt equals one billion watts, used here to describe massive AI training infrastructure scale
- Annual run rate: A projection of yearly revenue based on recent performance, calculated by annualizing quarterly or monthly figures
- Bedrock: AWS's managed service that provides API access to various foundation models from companies like Anthropic, OpenAI, and Meta
- Agentic AI: AI systems that can take autonomous actions and make decisions, rather than just answering questions or generating text
- Price-performance: The ratio of computing capability to cost, a key metric for comparing chip efficiency
Original article
Amazon chips no longer just a side dish, they're a $20B biz
The Trainium train keeps a-rollin'
Amazon is now among the top three datacenter chip businesses in the world, as its semiconductor business surpassed a $20 billion annual run rate ... and it would be closer to $50 billion if it included itself among the customers, CEO Andy Jassy said during the company's first quarter earnings call on Wednesday.
"If our chips business was a standalone business and sold chips produced this year to AWS and other third parties as other leading chip companies do, our annual revenue run rate would be $50 billion," Jassy said. "As best as we can tell, our custom silicon business is now one of the top three datacenter chip businesses in the world."
Amazon's rapidly expanding custom silicon business includes its Graviton processors, Trainium AI training chips, and Nitro security chips, and is growing at over 100 percent year over year, Jassy said.
"The speed at which we've gotten here is extraordinary, and we have momentum for our custom AI silicon. We've recently shared very large, multi-year, multi-gigawatt training commitments from the two leading AI labs in the world, Anthropic and OpenAI, as well as an increasing number of companies like Uber betting on Trainium," Jassy said. "And we now have over $225 billion in revenue commitments for Trainium."
OpenAI committed to consuming roughly two gigawatts of Trainium capacity through AWS to power its frontier models, with the agreement set to ramp in 2027. Anthropic committed to securing up to five gigawatts of current and future Trainium generations to train and run its advanced AI models.
Additionally, Meta signed an agreement to deploy tens of millions of AWS Graviton cores for its agentic AI workloads, and Uber partnered with Amazon to use Graviton4 and Trainium3 across its ride and delivery platform.
"As AI systems shift from answering questions to taking actions, and as post training and inference scale up, the compute required pulls heavily on CPUs," Jassy said. "That's why Meta chose Graviton, which delivers up to 40 percent better price performance than any other x86 processors and now used by 98 percent of the top 1,000 EC2 customers."
But anyone hoping to buy Trainium chips now will have to wait, Jassy said.
"Our Trainium2 chip has about 30 percent better price performance than comparable GPUs and has largely sold out," Jassy said. "Trainium3, which just started shipping at the start of 2026 and is 30 to 40 percent more price performant than Trainium2, is nearly fully subscribed, and much of Trainium4, which is still about 18 months from broad availability, has already been reserved."
Overall, Amazon reported first-quarter revenue of $181.5 billion, up 17 percent year over year. Its cloud unit, AWS, generated $37.6 billion in revenue during the quarter, a 28 percent jump that marked its fastest growth rate in 15 quarters.
Jassy said in the first three years after AWS launched, it had a $58 million revenue run rate, while in the first three years of this AI wave, AWS' AI revenue run rate is over $15 billion - nearly 260 times larger.
Amazon's overall net income for the quarter came in at $30.3 billion, or $2.78 per diluted share. That's up from $17.1 billion, or $1.59 per diluted share, in Q1 2025, but that number includes $16.8 billion in pre-tax gains from Amazon's investments in Anthropic, booked as non-operating income.
Amazon Bedrock, the company's managed service for accessing foundation models, processed more tokens in the first quarter than in all prior years combined, with customer spending on the platform growing 170 percent quarter over quarter, the company said. Amazon made OpenAI's GPT-5.4 model available in limited preview on Bedrock and announced that GPT-5.5 is coming soon. It also launched Anthropic's Claude Opus 4.7 on the platform.
The cloud giant also announced a collaboration with Cerebras to deliver what it described as the fastest AI inference speeds available for large language models through Bedrock, making AWS the only cloud provider to offer such a solution, it said.
The company also launched Bedrock AgentCore, a set of infrastructure tools for building and deploying AI agents, which Amazon said is now used to deploy an agent as frequently as every 10 seconds.