Amazon CEO Details AI Revenue, Addresses Spending Concerns in Annual Letter

Amazon's AI Services Generate $15 Billion in Annual Revenue

Amazon's cloud-computing unit, Amazon Web Services (AWS), has generated annualized revenue of more than $15 billion from its AI services, according to CEO Andy Jassy. This figure represents approximately 10% of AWS' $142 billion revenue run-rate.

The disclosure was made in Jassy's annual shareholder letter, which outlined the company's increasingly confident portrait of its AI ambitions. The figure is based on first-quarter performance and follows years of wait from investors and analysts. Amazon has invested billions of dollars in its AI services, and the company is under pressure to prove that this investment will pay off.

AWS is projecting $200 billion in capital expenditure this year, mainly focused on AI. This figure has spooked investors and fanned worries about an industry bubble. However, Jassy has stated that the company is not investing on a hunch. Instead, Amazon has already secured customer commitments for a substantial portion of its expected capital expenditure.

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Investors have welcomed Amazon's update, with some seeing it as a strong validation of AWS' success in turning the AI boom into real, high-growth revenue. The disclosure also adds to the growing momentum of AWS as a leader in AI infrastructure.

Amazon's custom chip business, which includes Graviton processors, Trainium AI chips, and Nitro networking cards, is also experiencing rapid growth. The business now has an annualized revenue run-rate of over $20 billion, doubling from the $10 billion disclosed alongside fourth-quarter results. Jassy has suggested that Amazon could eventually sell its chips to outside customers, similar to rival Google's strategy.

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Jassy stated that there is so much demand for Amazon's chips that it's quite possible the company will sell racks of them to third parties in the future. This move could potentially generate tens of billions of dollars in revenue for Amazon.