Amazon Inks $1B Deal with Synopsys to Power AWS Custom Chips

Amazon has signed a $1 billion deal with Synopsys to power its custom chips for Amazon Web Services (AWS). The agreement will accelerate chip design and expand use of Synopsys' electronic design automation, simulation, and AI tools. This collaboration builds on over 15 years of partnership and supports Amazon's purpose-built chips, including Nitro for cloud security and networking, Graviton for general-purpose computing, and Trainium for AI training and inference.

Custom silicon is a key differentiator for AWS, and the companies will accelerate multiphysics solutions on Trainium and Graviton. Synopsys will adopt Amazon EC2 and Bedrock for its own product development, creating a two-way commercial relationship. This deal follows other recent announcements that reinforce AWS' AI momentum.

AWS grew 37% year over year to $42.2 billion in the second quarter of 2026, taking the annualized revenue run rate to $169 billion. The segment operating margin expanded to 39.4%, and the AWS backlog reached $496 billion, growing at a triple-digit percentage rate.

Amazon shares have returned 6.8% in the year-to-date period, outperforming the Zacks Internet, Commerce industry's decline of 0.7%. However, competition remains intense, with Microsoft, Google, and Oracle ramping up AI infrastructure spending.