Amazon Plans $200B Capex for AI, AWS Posts 28% Q1 Growth
Amazon's AWS grew revenues by 28% in Q1 2026 while contributing 59% of operating income on 21% of sales. The company earmarked $200B in 2026 capital spending to ramp AI projects and pursue an external chip business targeting $50B in annual revenue.
1. AWS Q1 Performance
Amazon Web Services delivered 28% year-over-year revenue growth in Q1 2026 and accounted for 59% of the company's operating income despite representing just 21% of total sales. The segment also saw triple-digit growth in its custom AI chip deployments and secured key customers like OpenAI and Anthropic.
2. AI Investment and Capex Plans
Amazon has allocated $200 billion for capital expenditures in 2026, significantly boosting AI infrastructure spending. This ramp-up aligns the company with other major tech players that are set to spend nearly $700 billion on AI this year, reflecting escalating costs for components such as memory chips, which have risen 50% so far.
3. Potential External Chip Business
Leveraging its custom Graviton and Trainium chips, Amazon’s internal AI chip run rate stands at $20 billion annually. The company is preparing to expand production capacity beyond AWS needs to launch a standalone chip business that could reach $50 billion in external revenue, positioning it as a direct competitor to Nvidia.