AWS ponders selling its home-grown chips by the rack-load, has almost sold out AI capacity
Annual CEO letter reveals two customers want all Graviton servers, huge drone rollout, a million robots, and more megalomania
Amazon CEO Andy Jassy on Thursday delivered his annual letter to shareholders and it’s full of interesting news about the cloud and e-tail giant.
One detail that caught The Register’s eye was Jassy’s assertion that “If our chips business was a stand-alone business, and sold chips produced this year to AWS and other third parties (as other leading chips companies do), our annual run rate would be ~$50 billion.”
“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,” he added.
The CEO also revealed “two large AWS customers have already asked if they could buy *all* of our Graviton instance capacity in 2026,” a reference to cloudy servers powered by Amazon’s home-grown CPUs. Jassy says the company denied those requests, but added that Amazon earns $20 billion from services powered by its homegrown chips.
Plenty of that comes from its Trainium AI chips, which Jassy said are in such high demand that capacity for services running the Trainium3, which shipped early this year, “is nearly fully-subscribed.” He said “A significant chunk” of services powered by Trainium4, which Amazon won’t make broadly available for about 18 months, “has already been reserved.”
Jassy also expects Trainium “will save us tens of billions of capex dollars per year, and provide several hundred basis points of operating margin advantage versus relying on others’ chips for inference.”
The CEO also pointed out that three years after opening its doors, AWS’s revenue run rate was $58 million. In the same amount of time, the cloud colossus has won a $15 billion book of AI revenue. He also noted that while AWS annual revenue is currently $142 billion, 85 percent of global IT spend remains on-premises.
“This will change,” he wrote.
Jassy said AWS would grow even faster if it could get its hands on more electricity, having added 3.9 gigawatts of new capacity in 2025, and expects to double total power capacity by the end of 2027.
“And yet, we still have capacity constraints that yield unserved demand,” he lamented.
Flying high
Jassy also discussed Amazon’s aerial efforts, saying its satellite broadband service “is officially scheduled to launch in mid-2026” with around 200 satellites.
Prime Air, the company’s drone delivery service, now has “a design that’ll scale” and “plans to serve communities with 30 million customers by year-end, and expects to deliver half a billion packages by the end of this decade.”
Jassy said Prime Air will fly from “Same Day Fulfillment Centers” that store Amazon’s 90,000 best-selling products and deliver within 30 minutes. Another service, Amazon Now, will use “micro-fulfillment centers” that stock mere thousands of products and deliver in 20 minutes. Amazon already has more than 360 micro-fulfillment centers in India.
The Amazon in Chief also touched on robotics, revealing that the company has “over one million robots operating in fulfillment centers helping with stowing, picking, sorting, and intra-facility transport.”
“We've done this while continuing to be one of the largest job creators in the country,” he added, before foreshadowing further work “on form factors, use case diversity, agility, grasping, and intelligence.”
Again, he hinted that Amazon might become a vendor.
“Wherever we can leverage our scale and real-time feedback loop from so many robots in our fulfillment network to build robotics solutions for other industrial and consumer customers, we’ll explore doing so,” he wrote.
The letter also contains lots of corporate guff that readers may find distressing, most of it on a theme of the best-laid business plans seldom proving correct and a willingness to change direction as a key value for success.
Jassy said learning how to use AI will follow the same pattern.
“It’s not hard to imagine with the emergence of AI, that the interface with which customers want to interact with a retailer could be substantially different over time,” he wrote. “It may take us a while to find experiences better than what we have now, and it may take consumers time to adopt these new experiences.”
The CEO is, however, confident Amazon will get a bigger piece of everything it wants. ®