Amazon's Hidden Chip Business Surpasses $25B Annualized Run Rate
Top investors Daniel Mahncke and Shawn O'Malley argue that Amazon (NASDAQ:AMZN) offers more asymmetric upside than its hyperscaler peers, particularly in its custom silicon business. They point out that Amazon's chip business has grown from a $10 billion run rate to over $25 billion annualized in under a year.
On the Q2 FY2026 earnings call, CEO Andy Jassy mentioned AWS grew 36.7% year-over-year, the fastest growth in 18 quarters. The hosts suggest that Amazon's current $25 billion run rate for chips could even be double that or closer to $50 billion if they began selling chips externally.
AWS's $496 billion backlog supports the silicon expansion, with AWS revenue reaching $42.2 billion in Q2 FY2026 and operating income of $16.6 billion at a 39% operating margin. Amazon's capital spending is climbing to match, with roughly $200 billion planned for FY2026.