Amazon Plans to Sell Trainium AI Chips Externally in Direct Challenge to Nvidia

A Strategic Pivot in the AI Chip Wars

Amazon CEO Andy Jassy has confirmed that the company is preparing to sell physical racks of its custom Trainium AI chips to external customers within the next couple of years, according to comments made during Amazon's Q1 2026 earnings call. The disclosure marks a fundamental shift in Amazon's chip strategy and intensifies its rivalry with Nvidia in the data centre chip market.

Until now, customers could only access Trainium chips through Amazon Web Services on a cloud-rental basis. Selling standalone hardware racks would convert Amazon's in-house silicon arm into a merchant chip business, opening up a new revenue stream and putting it head-to-head with the dominant GPU supplier.

Surging Demand and Multi-Billion-Dollar Commitments

Jassy revealed that Trainium has already accumulated more than $225 billion in cumulative revenue commitments, underpinned by multi-year, multi-gigawatt deals with major customers including OpenAI, Anthropic, and Uber. Demand is outpacing supply across every product generation: Trainium2 is largely sold out, Trainium3 is nearly fully subscribed, and significant portions of Trainium4 have already been reserved.

Amazon's broader custom silicon portfolio, which spans Trainium AI accelerators, Graviton processors, and Nitro chips, now exceeds a $20 billion annual revenue run rate and is growing at triple-digit percentages year-over-year. Jassy described it as one of the top three data centre chip businesses in the world, suggesting that as a standalone entity selling externally, its run rate would reach $50 billion.

Competing and Partnering With Nvidia

Despite the more aggressive stance, Jassy framed the relationship with Nvidia as both competitive and collaborative. He confirmed that Amazon will continue ordering substantial quantities of Nvidia chips because many AWS customers prefer them. Trainium, however, is positioned as offering roughly 30% better price-performance than comparable GPUs, a margin Jassy said could save Amazon tens of billions of dollars in capital expenditure each year.

A $200 Billion Capital Backdrop

The chip ambitions sit within Amazon's broader $200 billion capital expenditure plan for 2026. AWS posted $37.6 billion in Q1 2026 revenue, up 28% year-over-year, its fastest growth rate in 15 quarters. Whether Amazon can balance surging internal demand against external rack sales will be the defining test as this new chapter in its silicon strategy unfolds.