AWS Drives $700B Cloud Capex Forecast, Amazon Plans $50B Chip Spin-Off
AMZN•Amazon's AWS investment drives an expected $700 billion cloud capex by end-2026, with capital spending guidance raised to $180–190 billion after memory prices rose 50% YTD and ASIC demand timing remains unclear. The company is planning a standalone Graviton and Trainium chip unit targeting $50 billion in annual external revenue.
1. AWS Capex Forecast and Spending Guidance
Amazon forecasts total cloud service provider capex at $700 billion by end-2026, raising AWS capital expenditure guidance to $180–190 billion after memory prices surged 50% year-to-date. Uncertain timing for custom ASIC deployments in data centers adds execution risk to the capex plan.
2. Planned Chip Business Spin-Off
Amazon is evaluating spinning off its Graviton and Trainium custom chip operations into a standalone business. Internal AWS use runs at a $20 billion annual pace, and the company targets $50 billion in outside sales once production capacity is sufficient.
3. Market Drivers and Cost Pressures
Major tech firms invested $130.6 billion in AI infrastructure in Q1 2026, intensifying competition and driving component cost inflation. Amazon’s elevated capex reflects strategic positioning in the AI hardware race amid rising memory and ASIC costs.
