Amazon Eyes $50B Chip Spin-Off While AI Capex Rises to $700B
Amazon contributed to $130.6bn AI spending in Q1 and plans to push capex to nearly $700bn by year-end, while AWS revenue grew 28% y/y versus Google Cloud’s 63% gain. It is exploring a standalone chip division leveraging its $20bn Graviton and Trainium run rate to target $50bn external sales.
1. AI Capex Surge
In the first quarter, Amazon contributed to total big tech AI infrastructure spending of $130.6 billion and is on track to push industrywide capex close to $700 billion by year-end, reflecting growing demand for AI compute and data center expansion.
2. AWS Growth Comparison
AWS posted 28% year-over-year revenue growth in Q1, lagging behind Google Cloud’s 63% expansion, highlighting intensifying competition in the cloud market and potential pressure on operating margins as capex increases.
3. Chip Division Prospect
Amazon is evaluating a standalone chip business leveraging its internally developed Graviton and Trainium processors, which currently generate a $20 billion annual run rate, with the goal of capturing up to $50 billion in third-party sales once production capacity scales.