Amazon plans to make Trainium AI chips available outside Amazon Web Services in late 2027. CEO Andy Jassy outlined the plan on Thursday during Amazon's third-quarter earnings call. Jassy said strong demand has prompted customers to encourage Amazon to offer Trainium beyond AWS.
Jassy described a significant trade-off between selling computing capacity externally and retaining capacity for internal use. Jassy said few companies operate large cloud businesses while also developing advanced chips capable of competing externally. Jassy said advanced chip production depends on a small number of suppliers. Jassy said annual chip allocations require companies to choose between external sales and internal deployment.
Jassy explained that external Trainium sales could bring revenue sooner because Amazon would recognize sales when the chips leave inventory. However, using the chips within AWS could generate more cumulative revenue and free cash flow through services including Amazon EC2 and Bedrock. Jassy said chips deployed internally can earn revenue for five to six years, complicating decisions based on immediate sales.
Jassy expects external chip sales and internal deployment both to become significant businesses. Jassy said Amazon's ability to develop scalable chips offering competitive price-performance could provide a major strategic advantage. Jassy said that advantage could improve Amazon's cost structure and support a separate chip business.
Amazon reported $201.94 billion in third-quarter revenue, below the analyst consensus of $202.31 billion. Amazon earned $1.89 per share, missing expectations of $1.97 per share. Amazon projected fourth-quarter revenue between $240 billion and $247 billion, against analyst estimates of $244.51 billion.
Benzinga Pro data showed Amazon shares closed Thursday's regular session at $243.79 after falling 4.25%. Benzinga Pro data showed Amazon shares then declined another 7.30% to $225.99 in after-hours trading. Benzinga Edge Stock Rankings showed a weak short-term price trend for AMZN. However, Benzinga Edge Stock Rankings showed positive medium- and long-term trends. Benzinga Edge Stock Rankings also assigned AMZN a moderate value score.
Amazon to Sell AI Chips Outside AWS in 2027, Says Andy Jassy
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Summary
Amazon to Sell AI Chips Outside AWS in 2027, Says Andy Jassy. CEO Andy Jassy announced during the Q3 earnings call that Amazon plans to sell Trainium AI chips outside AWS by late 2027. Jassy noted strong customer demand and the trade-off between external sales and internal use. He expects both areas to become major revenue streams. Investors evaluating the risk-to-reward ratio may see value investing in crypto and tech as Amazon expands its chip strategy.
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