AWS Growth Lags at 28% vs Google’s 63% as Capex Nears $700B, Amazon Eyes $50B Chip Business
AWS faces capacity and cost pressures as CSP capex nears US$700B but ASIC demand timing is unclear. AWS revenue rose 28% in Q1 2026, trailing Google Cloud’s 63%, while Amazon prepares to spin off Graviton/Trainium chips into a potential $50B business.
1. Cloud Service Provider Capex Plan
Amazon and other cloud service providers are targeting approximately US$700 billion in infrastructure capital expenditure by the end of 2026 to support surging AI workloads. Uncertainty around the delivery timeline for custom ASICs may delay performance upgrades and elevate AWS’s data-center costs.
2. AWS Growth Lags Competitors
In Q1 2026, AWS reported 28% revenue growth, trailing Google Cloud’s 63% and Microsoft Azure’s 40% increases. This slower growth rate raises questions about AWS’s competitiveness in the AI infrastructure market and its ability to maintain market share.
3. Ambitions for Standalone Chip Unit
Amazon is considering spinning off its Graviton and Trainium chip development into an external business that could scale from a $20 billion internal run rate to as much as $50 billion annually. Achieving this will require expanding production capacity beyond current AWS demand before a commercial launch.