Key Takeaways:
Amazon.com Inc. projected second-quarter revenue as high as $199 billion, surpassing analyst estimates, after a record-setting first quarter where accelerating cloud demand and a booming chip business signaled its AI investments are paying off.
"If our chips business was a stand-alone business... our annual run rate would be ~$50 billion," CEO Andy Jassy said on the earnings call, revealing the scale of the unit for the first time. "Our custom silicon business is now one of the top three data center chip businesses in the world."
The company reported first-quarter revenue of $181.5 billion, a 17% increase from the prior year, with operating profit reaching a record $23.9 billion. Amazon Web Services, its primary profit engine, saw revenue growth accelerate to 28% year-over-year, hitting $37.6 billion. The company guided for Q2 operating profit between $20 billion and $24 billion.
The results show Amazon is capturing a significant share of the boom in artificial intelligence spending, easing investor concerns about its high capital expenditures. The company's disclosure of a $364 billion AWS backlog and a $225 billion order book for its Trainium AI chips positions it as a formidable competitor to established chipmakers like Nvidia and cloud rivals like Microsoft.
Jassy told investors that the company is in the middle of a "once in a lifetime opportunity," with every application set to be reinvented with AI. The AI-specific revenue run rate for AWS has already surpassed $15 billion, a figure that is nearly 260 times larger than the entire AWS business was three years after its launch.
The custom chip division was a major focus. Jassy stated the business grew nearly 40% quarter-over-quarter and has secured multi-year commitments from leading AI labs Anthropic and OpenAI. The Trainium 3 chip, which began shipping in early 2026, is reportedly nearly fully subscribed, while much of the next-generation Trainium 4 has already been reserved 18 months ahead of its broad availability.
This vertical integration is expected to yield significant financial benefits. "We expect Trainium will save us tens of billions of dollars in CapEx annually and provide a several hundred basis point operating margin advantage versus relying on others for chips for our inference," Jassy added.
The growth in AI is also driving demand for Amazon's Graviton CPU chips. The company announced that Meta Platforms committed to using tens of millions of Graviton cores to power the CPU-intensive workloads behind its own agentic AI initiatives.
The company's guidance for the second quarter, which anticipates revenue between $194 billion and $199 billion, suggests the momentum will continue.
This article is for informational purposes only and does not constitute investment advice.
