Amazon’s custom chip business is growing at a pace that should make Nvidia at least slightly uncomfortable. CEO Andy Jassy revealed in his Q1 2026 shareholder letter that the company’s in-house silicon operation has hit an annual revenue run rate exceeding $20 billion, and he projects that figure could balloon to roughly $50 billion if the division were spun out as a standalone business selling to external customers.

The numbers behind Amazon’s chip ambitions

Amazon’s custom silicon division posted nearly 40% growth quarter-over-quarter in Q1 2026, with triple-digit year-over-year expansion. The portfolio driving this includes three product lines: Graviton CPUs for general compute, Trainium AI accelerators for machine learning workloads, and Nitro networking chips that handle the plumbing of AWS data centers.

The crown jewel of the moment is Trainium3, a 3-nanometer AI accelerator that began shipping in early 2026. It’s already nearly fully subscribed. Jassy’s $50 billion projection is based on the internal consumption rate within AWS plus the hypothetical external demand if Amazon were to sell these chips to outside customers. That external sales channel is something the company is actively exploring, with potential offerings expected within the next couple of years.

What this means for investors

For traditional investors, the $50 billion revenue projection positions Amazon’s chip division as potentially one of the top three silicon businesses globally. If external sales materialize as planned, this becomes a direct revenue competitor to Nvidia’s data center segment.

The risk to watch is execution. Amazon’s chips currently serve internal AWS needs almost exclusively. The leap from internal consumption to external commercial sales is significant, involving different go-to-market strategies, support infrastructure, and competitive dynamics. Nvidia’s ecosystem advantages, including its CUDA software stack and developer community, represent a moat that raw hardware performance alone may not overcome.