Amazon Just Revealed Its $50B AI Chip Ambition — and Nvidia Should Be Worried

Amazon Web Services is exploring a direct challenge to Nvidia's AI chip hegemony by selling its custom Trainium processors to other companies for data center use. AWS AI chief Peter DeSantis told Bloomberg that discussions with potential buyers are in early stages, though he declined to name them. The move stems from CEO Andy Jassy's April shareholder letter, where he noted that if Amazon's chip division were standalone, its run rate would be ~$50 billion—rivaling Intel's annual revenue and representing a significant fraction of Nvidia's current $326 billion run rate. Jassy stated that demand is so high that selling racks to third parties is "quite possible."

Historically, AWS resisted selling chips because its revenue model benefits from the "waterfall effect"—charging customers for compute tokens plus ancillary services like storage, security, and networking. Additionally, Amazon's chip capacity has been selling out faster than it can produce them; the current Trainium generation and the upcoming Trainium4 (over a year away) are both fully committed. Selling to outsiders would likely exacerbate waitlists unless Amazon can secure additional manufacturing capacity from TSMC—Nvidia's largest foundry partner. This move would directly pit Amazon against Nvidia, which recently announced its own push into CPUs for AI, encroaching on Intel and AMD turf. AWS spokesperson Doron Aronson confirmed the possibility, noting Jassy's openness to third-party sales.