Amazon Eyes $50B Graviton Spinout as AWS Grows 28% and AI Capex Hits $700B
Amazon's AWS revenue increased 28% year-over-year in Q1 2026 as AI infrastructure capex surged toward $700 billion by year-end. The company plans to spin out its Graviton and Trainium chips into an external unit targeting $50 billion in annual revenue.
1. AWS Q1 Growth and Market Position
AWS revenue increased 28% year-over-year in Q1 2026 as enterprise demand for cloud services remained robust. Despite this growth, Amazon's cloud unit trails Google Cloud's 63% and Microsoft Azure's 40% gains, highlighting intensifying competition.
2. Ramp-Up in AI Infrastructure Spending
In Q1 2026, Amazon joined other big tech firms in investing $130.6 billion in AI infrastructure, driving cloud service provider capex toward an estimated $700 billion by year-end. Rising component costs, particularly for high-performance memory chips, have prompted upward revisions to spending forecasts.
3. Planned Graviton and Trainium Spinout
Amazon's custom Graviton and Trainium processors have reached a $20 billion internal run rate for AWS workloads, and the company intends to package these chips into a standalone business. With external demand in focus, Amazon targets $50 billion in annual revenues from third-party sales once production capacity is expanded.