Amazon (AMZN) CEO Andy Jassy said in his annual shareholder letter that the tech giant may start selling its own AI chips to outside customers. If that happens, Amazon would compete more directly with companies like Nvidia (NVDA) and AMD (AMD). Jassy also pushed back on the idea that AI is overhyped by arguing that returns on investment will be strong. His confidence is based on how quickly AI is being adopted and how quickly Amazon’s AWS cloud business is growing. In fact, Jassy said that AWS’ AI revenue is now at an annual run rate of more than $15 billion and continues to rise.
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Trade AMZN with leverageHowever, the company is still limited by how much capacity it can provide. Even after adding 3.9 gigawatts of capacity in 2025, demand remains extremely strong. Impressively, some large customers have asked to buy all of Amazon’s Graviton chip capacity for 2026, a request the company cannot fully meet. At the same time, Amazon is seeing strong demand for its Trainium chips, with the current version sold out and the next version nearly fully booked. Because of this, Jassy said the company could eventually sell full systems of these chips to third parties.
Importantly, Amazon believes that its custom chips could significantly reduce costs and improve margins compared to external suppliers. Furthermore, Jassy said that the chip business currently has a $20 billion revenue run rate, but that figure could reach around $50 billion if it were sold as a standalone business. The company is also expanding in other areas, including robotics, and now has over one million robots in its facilities, as well as satellite internet and drone delivery.
Is Amazon a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 43 Buys and three Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMZN price target of $284.34 per share implies 23.9% upside potential.
