Amazon CEO Andy Jassy’s annual shareholder letter reads one thing like a Kendrick Lamar diss observe, if the rapper was a corporate-speak speaking CEO and never a poetic Pulitzer-prize successful musician.
Which means, you must know the historical past to grasp the entire opponents Jassy takes goal at, alongside cute private tales about his unrealized dream of being a sportscaster and watching hockey video games along with his dad.
After all, Jassy doesn’t throw the gauntlet down instantly. He takes a extra nuanced strategy. As an illustration, in his problem to Nvidia, he writes, “We have now a robust partnership with NVIDIA, will all the time have clients who select to run NVIDIA” and can all the time help these chips in its cloud.
However he additionally says: “Just about all AI to date has been finished on NVIDIA chips, however a brand new shift has began.” AWS clients, he says, “need higher price-performance” which means Amazon’s personal home-grown Trainium AI chips.
Jassy says demand is so excessive for this chip that capability for the most recent one, Trainium3, is sort of bought out. Remarkably, he says that capability can also be practically bought out for Trainium4, which nonetheless 18 months away from being out there.
Because of this Trainium has hit a $20 billion annual income run fee. But when Amazon had been a chipmaker that bought its wares to others, it will be at $50 billion ARR, he postulates.
Granted, Nvidia did $215.9 billion in actual revenue final yr. Nvidia is probably not shaking in its boots, but. Nonetheless, Jassy presents Trainium as a formidable up-and-comer.
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Jassy didn’t spare Intel both. He factors out that AWS’s homegrown Graviton CPU, a competitor to the Intel x86 structure, “is now used expansively by 98% of the highest 1,000 EC2 clients,” aka a few of the largest corporations on the planet. Two corporations even requested to “purchase all of our Graviton occasion capability in 2026,” he writes (emphasis his). “We will’t agree to those requests given different clients’ wants, however it provides you an concept of the demand.”
He promised that Amazon’s Starlink competitor, Amazon Leo, scheduled to launch in mid-2026 is already succeeding, too. It’s received contracts from Delta Airways, AT&T, Vodafone, Australia’s Nationwide Broadband Community, NASA, amongst others.
Apparently, he additionally mentioned Amazon could possibly be promoting robotics in the future. It could flip all the info from its 1 million warehouse robots into “robotics options” for industrial makes use of and customers, he wrote. Is there an Amazon humanoid in our future? We’ll see. He talked up different Amazon companies, too, like same-day supply, groceries, and drones.
However largely, Jassy tried to make the case for the a whole bunch of billions of {dollars} of capital expenditures he’s dedicated. In February, he introduced plans to spend $200 billion in 2026 on capex, largely constructing out AWS knowledge facilities. That’s greater than any of the opposite main tech corporations, that are additionally spending massive on capex. Jassy’s pitch to shareholders is smart contemplating Amazon’s inventory plunged to under $200 a share and hasn’t recovered.
“We’re not investing roughly $200 billion in capex in 2026 on a hunch,” he wrote, utilizing for instance that his cope with OpenAI included the mannequin maker pledging to spend $100 billion on AWS. After all, there are those that doubt OpenAI will meet all of its spending promises.
In a nod to that, Jassy insists that past OpenAI, “there are a number of different buyer agreements accomplished (and unannounced), or deep in course of,” lined as much as purchase the AWS capability.
We’ll have to attend and see. Those that trigger a bubble are by no means those who see (or admit) to its existence. “I’ve adopted the general public debate on whether or not this know-how is over-hyped, whether or not we’re in ‘a bubble.’” However he declares on this letter that, for Amazon no less than, this isn’t the case.
