Amazon CEO Andy Jassy has declared a "new shift" is underway in the artificial intelligence chip market, as the company's own processor business reaches an annual revenue run rate exceeding $20 billion. In his annual letter to shareholders, Jassy positioned Amazon's custom AI chips, named Trainium, as a growing challenge to the dominance of market leader Nvidia.
While affirming Amazon Web Services (AWS) will remain "the best place to run Nvidia" chips, Jassy stated customers are increasingly seeking "better price-performance." He drew a direct parallel to Amazon's earlier success in challenging Intel's CPU supremacy with its Graviton processor, launched in 2018. "The same story arc is unfolding in AI," Jassy wrote.
Price-Performance Push
The latest iteration, Trainium3, is claimed to be 30-40% more price-performant than its predecessor. This push for efficiency comes despite a Business Insider report last year which found some startups considered earlier Trainium 1 and 2 chips to be "underperforming" compared to Nvidia's offerings.
Jassy revealed that a "significant chunk" of the next-generation Trainium4 has already been reserved by customers, ahead of its widespread availability in approximately 18 months.
Billions in Potential Savings
The strategic move is framed as a major cost-saving initiative for Amazon itself. By using its own AI chips in its vast data centres, Jassy stated the company could significantly reduce its projected $200 billion capital expenditure bill. "At scale, we expect Trainium will save us tens of billions of capex dollars per year, and provide several hundred basis points of operating margin advantage versus relying on others' chips for inference," he wrote in the letter.
Expanding the Market
Beyond internal use, Amazon sells access to Trainium chips to other companies via its cloud services, with clients including AI firm Anthropic and ride-sharing giant Uber. Jassy indicated this external sales strategy could expand further, stating it is "quite possible we'll sell racks of them to third parties in the future."
The announcement comes as Amazon's stock has risen more than 25% over the past year, though it is down 1.2% since the start of 2025. Nvidia did not immediately respond to a request for comment from Business Insider on Jassy's remarks.