Amazon (AMZN) CEO Andy Jassy released his annual shareholder newsletter on Thursday, outlining the company\u2019s 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).<\/p>\n
Jassy said he doesn\u2019t believe the technology is either overhyped or a bubble, but rather that margins and returns on capital invested will be \u201cappealing.\u201d His convictions, he said, stem from how quickly AI is being adopted and the rapid increase in revenue for Amazon\u2019s AWS unit.<\/p>\n
According to Jassy, AWS\u2019s AI revenue has a run rate of more than $15 billion as of Q1 2026 and continues to grow. What\u2019s 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.<\/p>\n
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\u2019t agree to the move because it still needs to provide CPU capacity to its other customers.<\/p>\n
The CEO also took a shot at Nvidia, saying that while Amazon continues to use that company\u2019s chips, customers want better \u201cprice-performance.\u201d That, Jassy said, is why Amazon\u2019s custom AI GPU Trainium2 chip is sold out, while its Trainium3 is \u201cnearly fully-subscribed\u201d despite the fact that it started shipping at the start of 2026.<\/p>\n
\u201cHaving 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,\u201d Jassy said. \u201cAt 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\u2019 chips for inference.\u201d<\/p>\n
Read more: <\/em>Best credit cards for shopping on Amazon for April 2026<\/em><\/p>\n According to the chief executive, Amazon\u2019s 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.<\/p>\n If it were a standalone business, he said, Amazon\u2019s chip revenue would have a run rate of roughly $50 billion.<\/p>\n \u201cThere\u2019s so much demand for our chips that it\u2019s quite possible we\u2019ll sell racks of them to third parties in the future,\u201d Jassy said.<\/p>\n None of Amazon\u2019s 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.<\/p>\n<\/p><\/div>\n Beyond Amazon\u2019s AI and chip plans, the CEO also touched on Amazon\u2019s robotics efforts, saying that the company now has more than 1 million robots operating in its fulfillment centers. What\u2019s more, Jassy said the company is exploring building robots for third-party customers.<\/p>\n The executive also touted Amazon\u2019s satellite internet system, Amazon Leo, which stands for low Earth orbit.<\/p>\n According to Jassy, Amazon has more than 200 satellites in orbit and plans to launch thousands more in the coming years.<\/p>\n The service, he said, will launch in mid-2026 and already has customers, including Delta (DAL), which Amazon recently signed an agreement with, as well as JetBlue (JBLU) and AT&T (T).<\/p>\n Finally, Jassy touched on Amazon\u2019s drone delivery service, Prime Air, saying that it now has a \u201cdesign that\u2019ll scale\u201d and that the company \u201cplans to serve communities with 30 million customers by year-end, and expects to deliver half a billion packages by the end of this decade.\u201d<\/p>\n Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at <\/em>@DanielHowley<\/em><\/a>.<\/em><\/p>\n Click here for the latest technology news that will impact the stock market<\/strong><\/p>\n Read the latest financial and business news from Yahoo Finance<\/strong><\/p>\n<\/p><\/div>\n![\"Amazon](\"https:\/\/s.yimg.com\/ny\/api\/res\/1.2\/06fizgj6zs7bVanr.kxuYw--\/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MDtoPTY0MA--\/https:\/\/media-mbst-pub-ue1.s3.amazonaws.com\/creatr-uploaded-images\/2026-04\/6e2f1fb0-340c-11f1-adbf-7b16551d8339\")
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