Amazon AI Revenue Surpasses $15 Billion Run Rate
Amazon CEO Andy Jassy revealed in a shareholder letter on Thursday that the company’s AI services within its cloud division are generating an annualized revenue run rate exceeding $15 billion in the first quarter of 2026. The update helped ease investor concerns over Amazon’s heavy spending on artificial intelligence.
Stock Gains as Investor Sentiment Improves
Following the announcement, Amazon shares rose 1.6% in early trading on Thursday, reflecting renewed confidence in the company’s AI strategy.
Massive AI Investments Raise Industry Questions
Like its competitors, Amazon is under pressure to prove that its aggressive AI investments will deliver long-term returns. Earlier this year, the company projected capital expenditures of up to $200 billion, largely focused on AI infrastructure and development. This figure sparked concerns among investors about excessive spending and the possibility of an AI-driven market bubble.
Jassy Defends Long-Term AI Strategy
Jassy emphasized that Amazon is willing to absorb short-term free cash flow (FCF) pressure in exchange for significant long-term gains. He described artificial intelligence as a “once-in-a-generation opportunity,” highlighting both the rapid current growth and the even greater potential ahead.
Amazon Enters the AI Revenue Disclosure Race
This marks the first time Amazon has publicly disclosed financial figures for its AI business, positioning itself alongside major competitors such as NVIDIA, Microsoft, and Alphabet in the race to dominate the AI sector.
Analysts Turn Bullish on Amazon Stock
Citron Research commented positively on Amazon’s outlook, calling the opportunity “too compelling not to comment on,” and set a $300 price target for the company’s stock.
Amazon’s Chip Business Expands Rapidly
Jassy also highlighted strong growth in Amazon’s custom chip division, as major technology companies increasingly develop in-house chips to reduce reliance on external suppliers like Nvidia.
Amazon’s chip portfolio includes Graviton processors, Trainium AI chips, and Nitro networking cards. According to the company, this segment has doubled its annualized revenue run rate to over $20 billion, up from $10 billion previously reported.
A Hidden Giant Within Amazon?
Citron Research described Amazon’s chip division as “another trillion-dollar business hidden inside the company.” The firm suggested that if Amazon operated its chip business independently and sold to both internal and external clients, its annual revenue potential could reach approximately $50 billion.
Future Chip Sales to Third Parties Possible
Jassy also hinted at expanding chip sales beyond Amazon’s internal ecosystem. He noted that demand for Amazon’s chips is so strong that the company may eventually sell full server racks to external customers.
