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By Deborah Mary Sophia<\/p>\n
April 9 (Reuters) – Amazon’s AI services at its cloud-computing unit are generating annualized revenue of more than $15 billion, CEO Andy Jassy said, the first time the company \u200chas reported numbers on a business it has backed with billions of dollars in investment.<\/p>\n
The \u200cfigure, based on first-quarter performance, represents roughly 10% of Amazon Web Services’ $142 billion revenue run-rate and follows years of wait from investors \u200band analysts.<\/p>\n
The disclosure was one of several Jassy made on Thursday in his annual shareholder letter that sketched an increasingly confident portrait of the technology giant’s AI ambitions.<\/p>\n
Amazon shares rose 4.5%.<\/p>\n
Like rivals, Amazon is under pressure to prove its spending on AI would pay off. The company projected $200 billion in capital expenditure this year, mainly focused \u200con AI, a figure that spooked \u2060investors and fanned worries about an industry bubble.<\/p>\n
“We’re not investing … on a hunch,” Jassy said.<\/p>\n
“Of the AWS capex we expect to spend in 2026, much of which will \u2060be monetized in 2027-2028, we already have customer commitments for a substantial portion of it.”<\/p>\n
Investors cheered Amazon’s update.<\/p>\n
“The AI run-rate is a strong validation that AWS is successfully turning the AI boom into real, high-growth revenue,” said Brian \u200bMulberry, chief \u200bmarket strategist at Zacks Investment Management, which holds Amazon \u200bshares.<\/p>\n
“It’s still ‘early days’ per Jassy, but the momentum \u200cpositions AWS as a leader in AI infrastructure.”<\/p>\n
Meanwhile, smaller cloud rival Microsoft said in January its AI business had crossed an annual revenue run-rate of $13 billion in late 2024.<\/p>\n
While the disclosures from Amazon and Microsoft offer more clarity on Big Tech’s AI investment returns, they still do not compare directly, as the revenue run-rate metric projects annual performance by extrapolating current sales and relies heavily on the period it is calculated \u200cin.<\/p>\n
CUSTOM CHIP BOOM<\/p>\n
Jassy also pointed to rapid growth in Amazon\u2019s \u200bcustom chip business, as large tech companies develop their own processors \u200bto cut dependence on Nvidia\u2019s costly AI \u200bchips.<\/p>\n
That business, which includes Graviton processors, Trainium AI chips and Nitro networking cards, now \u200chas an annualized revenue run-rate of over $20 billion, \u200bdoubling from the $10 billion disclosed \u200balongside fourth-quarter results.<\/p>\n
Jassy suggested Amazon could eventually sell its chips to outside customers. Rival Google has found success with a similar strategy, striking a deal last October to supply Claude-creator Anthropic with \u200bone million of its custom AI \u200cchips, worth tens of billions of dollars.<\/p>\n<\/p><\/div>\n