Amazon AWS Growth Trails Peers as Company Plans $50B Graviton Chip Spin-Off
AWS grew 28% in Q1 2026, trailing Google Cloud’s 63% and Microsoft Azure’s 40%, while Alphabet’s $460B backlog highlights intensifying cloud competition. Amazon is preparing a standalone Graviton and Trainium chip business—currently at a $20B internal AWS run rate—with potential to reach $50B by selling externally.
1. AWS Growth Lagging Peers
Amazon’s AWS revenue grew 28% year-over-year in Q1 2026, trailing Google Cloud’s 63% and Microsoft Azure’s 40%. Alphabet’s cloud backlog reached $460 billion, underscoring intensifying competition in the AI infrastructure market.
2. Standalone Chip Business Strategy
Amazon plans to spin off its custom Graviton and Trainium chips into a standalone business. The chips currently generate a $20 billion internal run rate within AWS and could expand to $50 billion by selling externally once production capacity scales.