Amazon in Talks to Sell Custom Chips to Third-Party Data Centers
Alina Collins
Amazon is negotiating to sell its in-house chips to third-party data centers; CEO Jassy has pegged the business at $50 billion in annualized revenue if spun out — cloud giants' chip race is shifting from internal cost-cutting to external market share.
What chips is Amazon selling, and to whom?
Bloomberg reports Amazon is in talks with third-party data centers to sell its custom silicon; the news pushed Amazon's stock up by several dollars.
Amazon's chip family spans three lines: Graviton (general compute), Trainium (AI training), and Nitro (virtualization acceleration — a dedicated chip that slices physical servers into multiple virtual machines).
This means → chips that previously served only AWS internally are being turned into externally sellable products, a clear acceleration in commercialization.
Where does the $50 billion figure come from?
In April, CEO Andy Jassy estimated that if the chip unit were run independently — selling to both AWS and third parties — its annualized revenue would reach $50 billion.
In plain terms = that is roughly in line with analysts' forecast for AMD's full-year revenue — the equivalent of conjuring an AMD-sized chip company from scratch.
This is still a theoretical ceiling assuming full rollout; whether Amazon can convert these talks into scaled external orders is the real test.
Has Google already proven this path?
Last October, Google announced it would supply one million TPUs — tensor processing units, Google's custom AI chips — to Anthropic, establishing the first major precedent for selling in-house silicon externally.
This means → the cloud giants' chip competition is changing lanes: from "build for internal use, cut your own costs" to "sell externally, grab market share."
Amazon's move essentially follows Google's playbook, but with a larger revenue target.
Why didn't Nvidia fall on the news?
On the day of the report, Nvidia's stock rose about 2%; concerns about potential competition were temporarily overridden by the broader tech-sector rebound.
This reflects two things: Amazon's chips are not yet in the same tier as Nvidia's GPUs in performance or ecosystem, and the market is more focused on near-term sector sentiment than long-term competitive shifts.
In plain terms = Wall Street's stance is "let's see Amazon land real orders first" — it does not yet treat this as a direct threat to Nvidia.
How did the broader market and chip stocks perform this week?
U.S. equities recouped the losses triggered by Wednesday's Fed meeting, with the S&P 500 gaining about 1% for the week.
Apple CEO Tim Cook said iPhone prices will rise due to climbing memory and storage chip costs.
This means → the market read Cook's comment as a signal that the memory supply-demand imbalance is unlikely to ease soon, lifting shares of SanDisk, Western Digital, Applied Materials, and Lam Research.
Content is for reference only, not financial advice.