‘Not on a hunch’: Andy Jassy defends Amazon’s $200B spending spree

Andy Jassy’s new letter to Amazon shareholders is a data-heavy defense of the tech giant’s biggest bets — from AI and custom chips to satellite internet and 20-minute delivery.

In the process, the Amazon CEO discloses that AI revenue for AWS has hit a $15 billion annual run rate, that Amazon’s internal chips business is generating over $20 billion a year, and that two large customers asked to buy all of Amazon’s available Graviton chip capacity for 2026.

Amazon said no, but Jassy says it gives a sense for the demand.

“We’re not investing approximately $200 billion in capex in 2026 on a hunch,” he writes.

That is basically the thesis statement for this year’s letter, released Thursday morning. It continues a tradition that stretches back nearly three decades, to Amazon founder Jeff Bezos’s first shareholder letter in 1997, which introduced the world to the “Day 1” mindset and is appended to the latest letter every year in an attempt to show its enduring relevance.

The evolution: This is Jassy’s fifth installment since succeeding Bezos as CEO in 2021. His letters have gone from establishing his management philosophy and navigating a post-pandemic cost hangover to laying out the frameworks Amazon uses to invent and build. 

This year he touches on progress in businesses including grocery (where Amazon says it’s now the second-largest U.S. grocer), satellite broadband (Amazon Leo is set to launch commercially in mid-2026), Amazon Now delivery (expanding from India to the U.S. and Europe), Alexa+, and Zoox, its autonomous ride-hailing service now starting commercial service.

His overarching message: progress won’t be a straight line (here, Jassy’s letter riffs on the title of an album by the New Zealand indie rock band The Beths) but Amazon is placing big bets on many fronts simultaneously, as it has throughout its history, and the results will come. 

The unstated plea: have patience, folks, we’ve been here before, and look how it turned out.

The AI bet: Nowhere is this appeal more important than in AI, given investor concerns about the massive investments being made across the industry. Throughout the letter, Jassy makes the case that the company’s huge capital outlays are backed by real demand and realistic economics.

Jassy readily acknowledges that Amazon’s free cash flow (FCF) dropped from $38 billion to $11 billion last year, driven by a $50.7 billion increase in capital spending, primarily on AI infrastructure. That was despite revenue overall growing 12% from $638 billion to $717 billion last year.

“AI is a once-in-a-lifetime opportunity where the current growth is unprecedented and the future growth even bigger,” he writes, adding later, “We’re not going to be conservative in how we play this—we’re investing to be the meaningful leader, and our future business, operating income, and FCF will be much larger because of it.”

AWS AI revenue: The disclosure about the annual revenue run rate for AI in AWS ($15 billion as of Q1 2026) is a preview of sorts of Amazon’s upcoming quarterly earnings, which won’t be reported for a few weeks. Amazon hasn’t previously reported this type of AI revenue figure. 

To put the figure in context, AWS overall had a $142 billion dollar revenue run rate as of Q4 25.

“We have never seen a technology more quickly adopted than AI,” he writes, adding later, “Amazon is smack in the middle of this land rush, and companies are choosing AWS for AI.”

Jassy compares the current AI wave to the early days of AWS, noting that three years after AWS launched commercially the cloud division had a $58 million revenue run rate. Three years after generative AI took off, the company’s AI business is nearly 260 times greater than that.

Future external businesses: Jassy points to two areas where Amazon may open up internal capabilities to outside customers.

• It’s “quite possible” Amazon will sell racks of its internally developed chips to third parties in the future, he writes.
• In addition, he says, Amazon will explore building and selling its robotics solutions to other industrial and consumer customers. 

Both follow the Amazon playbook of building something internally, then offering it as an external service — the same pattern behind businesses such as AWS and Fulfillment by Amazon, the company’s logistics services for third-party sellers.

Chips economics: Jassy says Amazon currently only monetizes its custom chips through its own EC2 cloud service, but if the chips business were standalone and sold externally like Nvidia, the annual run rate would be roughly $50 billion.

He projects that at scale, Trainium will save “tens of billions of capex dollars per year” and provide “several hundred basis points of operating margin advantage” versus relying on third-party chips for inference.

Trainium2 has largely sold out. Trainium3, which started shipping in early 2026, is nearly fully subscribed. Trainium4, still about 18 months from broad availability, has already been significantly reserved.

“Our chips business is on fire,” Jassy writes, noting that the business “changes the economics for AWS, and will be much larger than most think.”

Across Amazon’s business, he writes, “It’s hard to overstate my optimism for what’s ahead.”

Read the full letter here.