In his recent shareholder letter, Amazon CEO Andy Jassy takes a bold and nuanced approach, akin to a diss track, but framed in corporate language. The letter highlights Amazon’s competitive edge within the tech landscape, distinguishing its capabilities in the Artificial Intelligence (AI) space while addressing key rivals like Nvidia and Intel.
Jassy’s discussion about Nvidia showcases a strategic relationship, acknowledging its dominance in the AI chip market, yet hinting at a shift towards Amazon’s proprietary Trainium AI chips. He notes the overwhelming demand for these chips, indicating that the latest Trainium3 is nearly sold out, along with future models like Trainium4, which is still 18 months from launch. This suggests a staggering annual revenue run rate of $20 billion for Trainium, which could rise to $50 billion if Amazon were a standalone chip manufacturer, albeit Nvidia’s impressive $215.9 billion from the prior year still towers over it.
Moreover, Jassy addresses Intel, revealing that Amazon’s custom Graviton CPU is extensively adopted by 98% of its top 1,000 EC2 customers. This demand is so significant that some companies have requested to purchase all Graviton capacity for 2026, a request Jassy indicates can’t be fulfilled due to broader customer needs.
Looking ahead, Jassy announces Amazon’s plans for its satellite broadband service, Amazon Leo, expected to launch in mid-2026, having already secured contracts with major players like Delta Airlines and NASA. He also hints at possible future ventures in robotics, suggesting Amazon may eventually harness their vast warehouse robot data for industrial and consumer applications.
Critical to Jassy’s message is the declaration of a hefty $200 billion capital expenditure plan for 2026, aimed primarily at expanding AWS data centres. This investment far exceeds what other tech giants are committing, responding to a backdrop of Amazon’s stock struggles, which dipped below $200 per share. He argues that these investments are underpinned by solid agreements, including one with OpenAI worth $100 billion, despite widespread skepticism about the realisation of such spending.
Jassy also reassures stakeholders regarding the viability of Amazon’s investments amid current debates about a potential tech bubble, stating that Amazon firmly believes in the technology’s potential and the sustainability of its growth trajectory.
In summary, Jassy’s letter sets a confident tone infused with strategic insights into Amazon’s future, while cleverly navigating competitive challenges, showcasing the company’s firm foothold in critical technological advancements like AI and beyond.
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