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Amazon Will Sell Its Trainium AI Chips to Outsiders
Amazon plans to sell its Trainium AI chips outside AWS from late 2027, Andy Jassy said on October 29, as revenue commitments for Trainium rose more than 20-fold in a year. AWS's backlog reached $578 billion.
The most consequential line of Amazon's earnings call on Thursday, October 29, was not about AWS growth but about chips. Chief executive Andy Jassy said revenue commitments for Trainium, Amazon's in-house AI accelerator, and for Graviton, its general-purpose server processor, had each risen more than 20 times from a year earlier, and that Amazon plans to start selling Trainium to outside customers in late 2027, according to an Investing.com transcript of the call. He added that earlier generations of Trainium capacity are selling at a premium.
Until now Trainium has been available only as rented capacity inside Amazon's own cloud. Selling the chips directly would put Amazon in competition with Nvidia and AMD for data-centre buyers, alongside Google, which has taken steps in the same direction with its TPUs. For investors the attraction is margin: a provider that designs its own accelerators keeps the profit that would otherwise go to the chip vendor, and can price compute below rivals that buy their hardware. The risk is execution, since a chip business needs software, support and supply chains that a cloud provider has not had to build for third parties.
The demand numbers behind the plan were large. AWS revenue grew 39% to $46.0 billion in the quarter, the fastest in nearly five years, with an operating margin of about 38.7%, and the backlog of contracted AWS revenue reached $578 billion, up by more than 100% from a year earlier. Jassy said AWS could grow by more than 40% in both 2027 and 2028 and become a trillion-dollar revenue business within five to ten years.
The cost is visible in the cash flow statement. Amazon's cash capital spending was $75.9 billion in the quarter and is expected to reach about $220 billion in 2026, with "meaningfully more" in 2027, and the shares fell about 6% after hours as earnings per share missed forecasts. Custom chips are partly an answer to that bill: every Trainium deployed in place of a bought-in GPU lowers the capital needed per unit of capacity, if the chip performs as promised.
The announcement adds a new variable to the AI hardware market. Nvidia's largest customers are now also its would-be competitors, and two of them, Google and Amazon, are moving to sell their own chips to others. That does not change Nvidia's results for the quarter it reports on November 17, but it does change the question analysts will ask on that call: how much of the next wave of AI spending is still open to a merchant chip supplier.
Sources: Investing.com — Earnings call transcript: Amazon Q3 2026 misses EPS as shares fall after hours (Oct 29, 2026); GeekWire — AWS growth hits 39%, its fastest in nearly five years, as Amazon misses on earnings (Oct 29, 2026); Forbes — AWS revenue rises to $46 billion in Amazon's third quarter (Oct 29, 2026)