Amazon CEO Andy Jassy’s annual shareholder letter reads like a Kendrick Lamar diss track. What if the rapper was a corporate CEO rather than a poetic Pulitzer Prize-winning musician?
That means you have to know the history to understand all the competitors Jassy is targeting, and you also have to know his cute personal story about his unfulfilled dream of becoming a sportscaster and watching hockey games with his dad.
Of course, Jassy doesn’t issue a direct challenge. He takes a more nuanced approach. For example, in his challenge to Nvidia, he wrote, “We have a strong partnership with NVIDIA, and there will always be customers who choose to run NVIDIA” and will always support these chips in the cloud.
But he also says that “almost all AI so far has been done on NVIDIA chips, but that’s starting to change.” AWS customers say they “want better price/performance,” meaning Amazon’s own Trainium AI chip.
Jassy says demand for these chips has been so high that capacity for the latest chip, Trainium3, is almost sold out. Surprisingly, he said that capacity for Trainium4, which is still 18 months away from release, is almost sold out.
This means that Trainium has achieved annual sales of $20 billion. But if Amazon were a chip manufacturer selling its products to others, he estimates, its ARR would be as high as $50 billion.
Of course, Nvidia had actual sales of $215.9 billion last year. Nvidia may not be swayed just yet. Nonetheless, Jassy presents Trainium as a strong emerging company.
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Jassy didn’t spare Intel either. He notes that AWS’s homegrown Graviton CPUs, a competitor to Intel’s x86 architecture, are now “in widespread use by 98% of the top 1,000 EC2 customers,” some of the world’s largest companies. Both companies even asked to “buy” it. every “, he wrote (emphasis mine). “Given the needs of other customers, we may not be able to agree to these requests, but it gives you an idea of the demand.”
He promised that Amazon’s Starlink competitor, Amazon Leo, scheduled to launch in mid-2026, is already seeing success. It has won contracts from Delta Airlines, AT&T, Vodafone, the Australian National Broadband Network, NASA and others.
Interestingly, he said Amazon might look into selling robotics at some point. He wrote that all the data from one million warehouse robots could be converted into “robotic solutions” for industrial use and consumers. Will there be Amazon humanoids in our future? We’ll see. He also talked about other Amazon businesses like same-day delivery, groceries, and drones.
But mostly Jassy has tried to justify the hundreds of billions of dollars in capital spending he has committed. Last February, he announced plans to spend $200 billion on investments in 2026, primarily building AWS data centers. That’s more than any other major technology company that’s also spending heavily on capital expenditures. Considering that Amazon’s stock price has fallen below $200 per share and has yet to recover, what Jassy is telling shareholders makes sense.
“Our gut instinct is that we’re not going to invest about $200 billion in capital expenditures in 2026,” he wrote, citing as an example that the deal with OpenAI includes the model maker’s commitment to spend $100 billion on AWS. Of course, some doubt that OpenAI will deliver on all of its spending promises.
In response, Jassy claims that in addition to OpenAI, “several other customer agreements, neither completed nor announced, are already in progress” to purchase AWS capacity.
We’ll have to wait. The person who creates the bubbles is never the one who sees (or acknowledges) the existence of the bubbles. “I have been watching the public debate about whether this technology is overrated and whether we are in a ‘bubble.’” But he declares in this letter that this is not the case, at least for Amazon.
