Amazon cloud unit’s AI revenue run rate exceeds $15 billion, CEO says
Amazon is up nearly 2% in premarket trading after the company disclosed that its cloud unit’s AI revenue run rate topped $15 billion in the first quarter of 2026, the first hard number the company’s provided for its top-line AI performance.
Sales generated from the emergent technology are “ascending rapidly” and already 260x what Amazon Web Services revenues were at a similar time in its maturity, CEO Andy Jassy wrote in his letter to shareholders.
Amazon’s most defining feature that allowed the e-commerce and cloud company to scale to the behemoth it is today is its unrelenting willingness to invest. Jassy’s letter affirmed the company is applying that exact same approach to AI across multiple business lines.
“We’re not going to be conservative in how we play this — we’re investing to be the meaningful leader, and our future business, operating income, and FCF [free cash flow] will be much larger because of it,” he wrote.
He acknowledged that AWS could be growing “even faster,” noting that the cloud division continues to face “capacity constraints that yield unserved demand.” He added that Amazon had to turn down two large AWS customers that wanted to buy all of its custom Graviton CPU chip capacity this year.
Amazon also said its custom chip business, including Graviton, Trainium, and Nitro, has now exceeded a $20 billion annual revenue run rate, doubling from the $10 billion reported earlier this year.
On the investment side, Amazon reiterated its plans to spend roughly $200 billion in capital expenditure in 2026. While investors have become somewhat reticent to buy into the promise of future AI-generated cash flows, Jassy pushed back on those concerns, saying that the company isn’t investing “on a hunch” and offering a timetable for when these investments will pay off.
Much of the capex is expected to be monetized in 2027 and 2028, he said, and is already supported by customer commitments, including more than $100 billion from OpenAI, as well as several other deals completed or “deep in process.”
Amazon’s most defining feature that allowed the e-commerce and cloud company to scale to the behemoth it is today is its unrelenting willingness to invest. Jassy’s letter affirmed the company is applying that exact same approach to AI across multiple business lines.
“We’re not going to be conservative in how we play this — we’re investing to be the meaningful leader, and our future business, operating income, and FCF [free cash flow] will be much larger because of it,” he wrote.
He acknowledged that AWS could be growing “even faster,” noting that the cloud division continues to face “capacity constraints that yield unserved demand.” He added that Amazon had to turn down two large AWS customers that wanted to buy all of its custom Graviton CPU chip capacity this year.
Amazon also said its custom chip business, including Graviton, Trainium, and Nitro, has now exceeded a $20 billion annual revenue run rate, doubling from the $10 billion reported earlier this year.
On the investment side, Amazon reiterated its plans to spend roughly $200 billion in capital expenditure in 2026. While investors have become somewhat reticent to buy into the promise of future AI-generated cash flows, Jassy pushed back on those concerns, saying that the company isn’t investing “on a hunch” and offering a timetable for when these investments will pay off.
Much of the capex is expected to be monetized in 2027 and 2028, he said, and is already supported by customer commitments, including more than $100 billion from OpenAI, as well as several other deals completed or “deep in process.”
