Amazon cloud unit’s annualised AI revenue exceeds $15 billion

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 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% 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 rose 4.5%.

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 on AI, 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.

Investors cheered Amazon’s update.

“The AI run-rate is a strong validation that AWS is successfully turning the AI boom ​into real, high-growth revenue,” said Brian Mulberry, chief market strategist at Zacks Investment Management, which holds Amazon ​shares.

“It’s still ‘early days’ per Jassy, but the momentum positions AWS as a leader in AI infrastructure.”

Meanwhile, smaller cloud rival ‌Microsoft said ⁠in January its AI business had crossed an annual revenue run-rate of $13 billion in late 2024.

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 in.

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, now ​has an ⁠annualized revenue run-rate of over $20 billion, doubling from the $10 billion disclosed alongside fourth-quarter results.

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 one million of ⁠its ​custom AI 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. Reuters