Amazon Plans $200B 2026 Capex, Bets on $20B Chip Business Growth
Amazon commits roughly $200 billion in 2026 capital expenditures to support AWS AI expansion and data-center buildout, despite free cash flow dropping to $11 billion in 2025 from $38 billion. Its three custom silicon lines generated over $20 billion annualized revenue, with potential to reach $50 billion if sold broadly.
1. Capital Expenditure Plans
Amazon has outlined a roughly $200 billion capital expenditure plan for 2026, driven by heavy investment in AI data centers and infrastructure. Jassy highlighted that customer commitments, including a deal with an AI partner exceeding $100 billion, underpin this capex to address surging compute demand.
2. AWS Growth and Capacity Constraints
AWS's AI business is on pace to generate $15 billion in annualized revenue, up from virtually zero three years ago, contributing to a $142 billion run rate across all AWS services. Rapid uptake has led to capacity constraints, with new data centers filling to capacity immediately.
3. Custom Chip Business Ambitions
Amazon's three custom silicon lines—Graviton, Trainium, and Nitro—are collectively producing over $20 billion in annualized revenue, growing triple digits year over year. Selling these chips on the open market could expand this business to $50 billion in revenue and reduce reliance on third-party GPUs.
4. Financial Performance Impact
Heavy AI and data-center spending lifted 2025 capital expenditures by $50.7 billion, cutting free cash flow to $11 billion from $38 billion in the prior year. Despite this, full-year sales rose 12% to $717 billion and operating income increased 17% to $80 billion, reflecting strong top-line growth.