The $200 Billion Reason Why Amazon Could Be an Overlooked AI Winner

Most of the attention in the artificial intelligence (AI) industry has been focused on semiconductor manufacturers. nvidia. But the biggest spenders on AI infrastructure this year were not the beneficiaries of the euphoria on Wall Street that led to soaring stock prices for many chipmakers.

we are talking about Amazon (AMZN +1.60%)of course.

When the company told investors in February that it would spend about $200 billion in capital spending in 2026, its stock price fell to about $198 as the size of the investment unnerved a market already anxious about when the expansion would pay off. And even though the stock price recently recovered to above $250, the stock price is still significantly lower. S&P 500The return over the past five years was only 10% this year. This is well behind the gains many AI-benefiting stocks saw in 2026.

But that $200 billion may be the very reason Amazon is an overlooked winner of the AI ​​era. This spending funds two things at the same time. One is one of the largest blocks of AI computing capacity in the world, and the other is Amazon’s own chip business, which is growing incredibly fast.

Image source: Getty Images.

spending on demand

Importantly, most of the $200 billion is going to Amazon Web Services (AWS), the company’s cloud computing business, and spending is following demand rather than ahead of it. AWS revenue reached $37.6 billion in the first quarter, up 28% year-over-year. This was the fastest growth in 15 quarters and accelerated from 24% in the fourth quarter of 2025 and 20% in the third quarter. This increased the segment’s annual run rate to $150 billion and operating profit to $14.2 billion from $11.5 billion the previous year.

Behind this growth is a committed customer spend backlog of $364 billion at the end of the quarter, and that figure doesn’t include the recent deal it signed with AI lab Anthropic worth more than $100 billion.

The $200 billion figure remains the largest annual capital plan of any tech giant. Next largest, alphabetBy 2026, it will reach $190 billion. For Amazon, this is a sharp increase from about $130 billion in 2025, with the bulk allocated to AWS.

today’s change

(1.60%) $4.00

current price

$254.02

Key data points

market capitalization

$2.7T

work range

$251.78 -$255.83

52 week range

$196.00 -$278.56

volume

1.4 million

average volume

45.1M

gross profit

50.60%

A few in the chip industry are watching

What gets less attention is that Amazon has quietly become a significant chip maker. Custom silicon designed for AWS (Trainium and Graviton processors, Nitro EC2 network interface cards) recorded annual sales of $20 billion in the first quarter after growing approximately 40% quarter-on-quarter, and continues to grow at a triple-digit rate annually.

And on the company’s first-quarter earnings call, CEO Andy Jassy said Amazon’s custom silicon operations are now “one of the top three data center chip companies in the world,” by the company’s own estimates.

Amazon has pledged more than $225 billion in revenue for its Trainium chips, including multi-year, multi-gigawatt deals with AI labs Anthropic and OpenAI. Additionally, Trainium2 offers about 30% better price-performance than similar graphics processing units (GPUs) and is largely sold out, while the latest Trainium3, which began shipping earlier this year, is nearly fully booked, executives explained in Amazon’s most recent earnings call.

Designing its own chips allows Amazon to fill its data centers with cheaper computing power and maintain margins for outside suppliers. This is a key cost issue in building AI.

But this big expense is also risky. Despite operating cash flow rising 30% to $148.5 billion, Amazon’s free cash flow fell to $1.2 billion over the past 12 months from $25.9 billion a year ago. Strong return management expectations may not materialize if demand for AI capacity declines before data centers and chips are maintained this year.

And with a price-to-earnings ratio of around 32 as of this writing, the stock isn’t cheap.

For investors who believe AI deployment is years away, Amazon appears to be one of the quieter beneficiaries. That is, companies that are building capabilities and making more and more chips to fill them. That said, holding smaller positions may be prudent as spending increases holding risk.