Quietly, Amazon is building its new and unique growth engine:
When thinking about Amazon, most investors immediately think of online retail or AWS,
but beneath the surface, a new growth engine has been built in recent years, one that could become one of the company's most important strategic assets.
Amazon's chip business!
This is an activity that is becoming a significant growth engine in its own right:
In Q1 2026, the company's management revealed that the chip business reached an annual revenue run rate of over $20 billion, with growth of over 100% compared to the previous year.
But perhaps the most interesting data point came from CEO Andy Jassy,
who said: 'If the chip division were an independent company selling its products to AWS and other customers, its revenue run rate would be estimated at approximately $50 billion per year.'
This means that Amazon is currently building a massive chip business, but most of the market still prices it as part of AWS, and not as an independent operation with significant value.
In addition to revenue, the chips also improve profitability.
Instead of purchasing huge quantities of GPUs from third parties, AWS can increasingly use the Trainium chips it developed itself.
This move is expected to save tens of billions of dollars over the years, and simultaneously significantly improve AWS's operating profit margin.
The company's roadmap looks impressive:
The Trainium 2 chip is already out of stock, most of the Trainium 3 quantities have been pre-ordered, customers are already placing pre-orders for Trainium 4, and Amazon is simultaneously developing Trainium 5.
Concurrently, according to reports from recent weeks, starting in 2027, Amazon plans to transition some of its consumer products as well, including Kindle, Echo, and Fire TV, to in-house developed chips.
Such a move could add approximately 40 million production units per year and further expand the scope of operations.
And last week, another update arrived, illustrating how strong demand is.
Amazon's cloud platform AWS updated supply chain providers that it is raising its forecast for ASIC server shipments in Q3 2026 by approximately 20% to 30% above the original forecast.
This means that demand for Trainium 3 servers is higher than expected, and Amazon is even accelerating some shipments to meet customer demands.
The customer list clearly explains the bigger picture:
Anthropic, one of Amazon's largest AI partners, significantly increased its compute power consumption as part of its long-term collaboration with AWS.
In addition to it, OpenAI and Uber also use Trainium solutions.
Meanwhile, the Amazon Bedrock platform already serves approximately 125,000 enterprise customers, with a significant portion of its inference services based on Trainium chips.
Ultimately, Amazon is not just building another AI chip.
It is building an entire system that connects chip design, cloud infrastructure, AI services, and the world's largest customers.
Control over the entire value chain allows it to offer a highly competitive price-performance ratio, maintain higher profitability, and reduce dependence on external chip suppliers.
The market may still view AWS as a cloud company, but more and more signs indicate that within AWS, one of the world's largest chip companies is quietly growing.