Key TakeawaysAndy Jassy refuted concerns about an AI investment bubble in his latest shareholder communicationAWS artificial intelligence offerings have reached more than $15 billion in annual revenue, accounting for approximately 10% of total AWS salesThe company’s proprietary semiconductor division has expanded its annual run rate to exceed $20 billion, representing a twofold increaseAccording to Jassy, external sales of these chips could potentially reach $50 billion — matching the scale of Broadcom’s AI semiconductor operationsThe e-commerce giant outlined $200 billion in capital investments planned for 2026, predominantly targeting AI infrastructureIn his latest annual message to shareholders, Amazon CEO Andy Jassy vigorously defended the company’s aggressive artificial intelligence spending strategy.Amazon.com, Inc., AMZN“My strong conviction, at least for Amazon, is that the answers are no, no, and yes,” Jassy stated, addressing concerns about AI hype, bubble risks, and return on investment potential.Thursday’s shareholder letter marked the first occasion Amazon publicly quantified its AWS artificial intelligence revenue. The division is currently generating over $15 billion on an annualized basis, calculated from first-quarter results.This amount constitutes roughly 10% of AWS’s overall $142 billion annual revenue trajectory. Market watchers and financial analysts have long anticipated this financial transparency.According to Jassy, AI-related revenue is experiencing rapid growth, with AWS expansion limited primarily by industrywide capacity shortages rather than demand.The Seattle-based technology giant has earmarked $200 billion for capital spending this year, with the majority allocated toward AI-focused infrastructure. This substantial investment initially spooked shareholders and intensified speculation about excessive industry spending.Jassy countered these concerns directly. “We’re not investing on a hunch,” he emphasized, noting that Amazon has already secured customer agreements covering a substantial portion of AWS capital expenditure scheduled for 2026.Semiconductor Division Experiences Dramatic GrowthAmong the most significant revelations in Jassy’s letter was information regarding Amazon’s proprietary chip operations. This division — encompassing Trainium AI accelerators, Graviton central processors, and Nitro networking components — has doubled its revenue run rate to surpass $20 billion annually.This represents a substantial jump from the $10 billion benchmark Amazon reported during its fourth-quarter earnings announcement.Jassy elaborated further, suggesting that if Amazon marketed all internally produced chips to external clients this year, the division could potentially generate $50 billion in yearly revenue.By comparison, Broadcom’s artificial intelligence chip segment is projected to produce approximately $10.7 billion this quarter alone. Broadcom commands a $1.66 trillion market capitalization, powered significantly by its semiconductor business.External Customer Sales Under ConsiderationJassy suggested Amazon might eventually offer its chips for direct purchase to third-party buyers, creating competition with Nvidia and Broadcom — companies that currently supply Amazon.“There’s so much demand for our chips that it’s quite possible we’ll sell racks of them to third parties in the future,” he indicated.Google has previously explored a similar approach. Last October, the company announced an agreement to provide Anthropic with one million custom AI processors, representing a deal valued in the tens of billions.Reuters additionally disclosed last month that Jassy informed an internal gathering that AWS revenue could eventually reach $600 billion annually — twice his previous projection — propelled predominantly by artificial intelligence services.Amazon has simultaneously reduced its workforce by approximately 30,000 positions in recent months, eliminating underperforming business units and adjusting for pandemic-era staffing levels.Amazon shares appreciated roughly 1.5% during premarket trading hours following the shareholder letter’s publication.The post Amazon (AMZN) Stock Climbs as Jassy Reveals $20B Chip Business with $50B Potential appeared first on Blockonomi.