Amazon cloud unit’s AI revenue run rate exceeds US$15 billion in first quarter, CEO says

The Amazon logo is displayed at a news conference in New York on Sept. 28, 2011. (AP Photo/Mark Lennihan, File)

Amazon’s AI services at its cloud-computing unit are generating annualized revenue of more than US$15 billion, CEO Andy Jassy said, the first time the company has reported numbers on a business it has backed with billions of dollars in investment.

The figure, based on first-quarter performance, represents roughly 10 per cent of Amazon Web Services’ $142 billion revenue run rate and follows years of wait from investors and analysts.

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.

Amazon shares were up 1.5 per cent in premarket trading.

Like rivals, Amazon is under pressure to prove its spending on AI would pay off. The e-commerce giant predicted in February its capital outlay would total $200 billion this year, mainly focused on AI development and infrastructure, a figure that spooked investors and fanned worries about an industry bubble.

“We’re not investing ... on a hunch,” Jassy said.

“Of the AWS capex we expect to spend in 2026, much of which will be monetized in 2027-2028, we already have customer commitments for a substantial portion of it.”

AI revenue is “ascending rapidly” and the cloud business would be growing even faster without the capacity constraints that the tech industry is currently facing, he said.

Reuters reported last month that Jassy told an internal all‑hands meeting that AI could help Amazon Web Services reach $600 billion in annual sales, double his earlier estimate.

But as Amazon pours money into AI, it has also cut around 30,000 jobs in recent months to reduce bureaucracy, exit underperforming businesses and make up for pandemic-era over-hiring.

Custom chip boom

Jassy also pointed to rapid growth in Amazon’s custom chip business, as large tech companies develop their own processors to cut dependence on Nvidia’s costly AI chips.

That business, which includes Graviton processors, Trainium AI chips and Nitro networking cards, has doubled its annualized revenue run rate to over $20 billion, up from the $10 billion disclosed alongside fourth-quarter results.

The revenue run rate metric projects annual performance by extrapolating current sales.

Jassy suggested Amazon could eventually sell the chips to outside customers. Rival Google has found success with a similar strategy, striking a deal in October last year to supply Claude-creator Anthropic with one million of its custom artificial intelligence chips, worth tens of billions of dollars.

“There’s so much demand for our chips that it’s quite possible we’ll sell racks of them to third parties in the future,” Jassy said.

Reporting by Deborah Sophia in Bengaluru; Editing by Jonathan Ananda and Devika Syamnath, Reuters