Amazon CEO Andy Jassy dismissed fears of an artificial intelligence bubble and told investors they shouldn't expect any slowdown in the firm's AI investments.
Shares of Amazon were up 4% in Thursday trading.
"I've followed the public debate on whether this technology is over-hyped, whether we're in 'a bubble,' and if the margins and ROIC [return on invested capital will be appealing. My strong conviction, at least for Amazon, is that the answers are no, no, and yes," Jassy writes in a shareholder letter for fiscal year 2025, published Thursday.
Amazon has projected capital expenditure of around $200 billion this year, largely on AI data centers. That outstrips even the spending of other major U.S. technology companies such as Microsoft or Google-parent Alphabet.
Jassy says he has the figures to back up the huge spending. Notably, he said Amazon's in-house chip business is already on track to generate more than $20 billion in annual revenue. Amazon's CEO says that if the chip unit were a stand-alone business and sold the processors produced this year to third parties, it could generate annual sales of $50 billion.
"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," Jassy writes.
Rack-level sales to third parties would bring Amazon into direct competition with leading AI chip makers Nvidia and Broadcom. Amazon is still a big customer for Nvidia chips.
If Amazon's Trainium and Graviton chips generated $50 billion in annual revenue, that would be similar to Broadcom's AI chip business, which is expected to generate around $10.7 billion in revenue in the current quarter.
Broadcom has a market capitalization of $1.66 trillion, largely due to its AI semiconductor business, although it also has a big software division. Amazon is valued at around $2.38 trillion.
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