Amazon AWS Grows 28% with $20B Chip Unit as $700B AI Capex Looms
Amazon AWS Q1 revenue rose 28% year-over-year and its Graviton/Trainium chip unit achieved a $20 billion annual run rate with plans to scale external sales to $50 billion. Hyperscaler AI infrastructure capex is forecast to reach $700 billion by 2026, underpinning AWS investment despite trailing Alphabet’s 63% and Azure’s 40% cloud growth.
1. AWS Q1 Performance
Amazon Web Services reported 28% year-over-year revenue growth in Q1 2026, driven by sustained enterprise demand for cloud computing services. This growth rate trails Microsoft Azure’s 40% and Google Cloud’s 63%, reflecting intensifying competition in the AI infrastructure market.
2. Custom Chip Unit Expansion
The in-house Graviton and Trainium chip unit has reached an internal annual revenue run rate of $20 billion. Amazon plans to expand production capacity to support external sales, targeting a potential $50 billion revenue stream if adopted by third-party customers.
3. AI Infrastructure Spending
Global AI infrastructure capital expenditures by hyperscalers are projected to total $700 billion by the end of 2026. This massive spending cycle underpins AWS’s ongoing data center investments while highlighting the scale of competition and rising component costs across the industry.