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 profitable musician.
Which means, you must know the historical past to grasp all the rivals Jassy takes goal at, alongside cute private tales about his unrealized dream of being a sportscaster and watching hockey video games together with his dad.
After all, Jassy doesn’t throw the gauntlet down instantly. He takes a extra nuanced strategy. As an example, in his problem to Nvidia, he writes, “Now we have a powerful partnership with NVIDIA, will all the time have clients who select to run NVIDIA” and can all the time assist these chips in its cloud.
However he additionally says: “Just about all AI so far has been carried out on NVIDIA chips, however a brand new shift has began.” AWS clients, he says, “need higher price-performance” that 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 be almost bought out for Trainium4, which nonetheless 18 months away from being out there.
Which means Trainium has hit a $20 billion annual income run fee. But when Amazon have been a chipmaker that bought its wares to others, it might be at $50 billion ARR, he postulates.
Granted, Nvidia did $215.9 billion in precise income final yr. Nvidia might not be 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 number of the largest firms on the earth. Two firms 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 thought 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.
Curiously, he additionally mentioned Amazon could possibly be promoting robotics someday. It could flip all the information from its 1 million warehouse robots into “robotics options” for industrial makes use of and shoppers, 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 principally, Jassy tried to make the case for the lots of of billions of {dollars} of capital expenditures he’s dedicated. In February, he introduced plans to spend $200 billion in 2026 on capex, principally constructing out AWS information facilities. That’s greater than any of the opposite main tech firms, 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 take care of 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 guarantees.
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 expertise 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.
