Amazon AWS Growth Lags at 28% While Chip Unit Eyes $50B Revenue
Amazon Web Services grew 28% year-over-year in Q1 2026, trailing Microsoft Azure's 40% and Google Cloud's 63% growth as Google Cloud backlog reached $460 billion. Amazon’s chip division posted a $20 billion annual run rate for internal AWS use and could expand to $50 billion by selling Graviton and Trainium chips externally.
1. AWS Growth Performance
Amazon Web Services posted 28% growth in Q1 2026, trailing Microsoft Azure's 40% and Google Cloud's 63% year-over-year gains as Google built a $460 billion cloud backlog. This divergence raises competitive pressure on AWS pricing and customer retention strategies.
2. Cloud Infrastructure Capex Environment
Global cloud service providers are set to invest $700 billion in AI and data-center infrastructure this year, fueling demand for AWS capacity. Surging component costs—memory prices climbed 50%—may push Amazon’s capex and operating expenses higher.
3. Amazon's Chip Business Outlook
Amazon’s custom Graviton and Trainium chips generated a $20 billion annual run rate serving internal AWS workloads. Expanding to third-party sales could boost chip revenue to $50 billion, though production capacity limits may postpone the external launch.