Amazon AWS Growth Slows to 28% While Chip Unit at $20B Run Rate Targets $50B
AMZN•Amazon Web Services revenue grew 28% year-over-year in Q1 2026, trailing Google Cloud’s 63% and Microsoft Azure’s 40% growth. Amazon’s Graviton and Trainium chip unit runs at a $20 billion annual rate internally and could reach $50 billion in external sales once capacity expands.
1. AWS Growth Performance
In Q1 2026, AWS reported 28% year-over-year revenue growth, marking its slowest expansion since early 2021. This pace lagged behind Google Cloud’s 63% increase and Microsoft Azure’s 40% growth, raising questions about AWS’s market share in the AI infrastructure buildout.
2. Escalating AI Investment Costs
Amazon joined peers in spending a record $130.6 billion on AI infrastructure in Q1 alone, contributing to a projection of $700 billion in industry-wide AI investments by year-end. Surge in memory chip prices—up 50% so far this year—has prompted an upward revision to Amazon’s capital expenditure forecast.
3. Chip Unit Expansion Plans
Amazon’s custom chip division, powering internal AWS services, achieved a $20 billion annual revenue run rate with Graviton and Trainium processors. The company aims to offer these chips to third-party customers, potentially boosting unit revenues to $50 billion once additional production capacity is secured.
