Amazon's Trainium chips hit a $25B run rate, with Trainium3 sold out and Trainium4 reserved. Alpha Score 65. Here's why the stock is a buy.
Amazon (NASDAQ: AMZN) crossed a $25 billion annual run rate for its custom chip business, a threshold that shows its AI silicon is catching on with cloud clients. The figure comes from Amazon's own disclosures, and it marks a milestone for a segment that barely existed a few years ago.
The growth is being driven by Trainium, Amazon's family of AI training chips. Management said in its latest shareholder letter that Trainium2 offers roughly 30% better price-performance than Nvidia (NASDAQ: NVDA) GPUs, and that demand for the chips has sold out capacity. Trainium3, which launched at the start of 2026, sold out a few months ago. Trainium4, expected in 2027 or 2028, has already had a large chunk of capacity reserved.
The chip business is growing at a triple-digit rate, which is what pushed the run rate over $25 billion. That makes Amazon Web Services a go-to place for AI workloads, and it gives Amazon a way to undercut the cost of renting Nvidia hardware.
The pitch is simple: Nvidia GPUs are general-purpose workhorses. They perform well, but they aren't purpose-built for any particular workload, and they aren't cheap. The cost of purchasing and renting them is high. Amazon's answer was to design its own silicon, following the path Alphabet blazed with its tensor processing unit, or TPU, chipsets.
Trainium chips deliver results comparable to a GPU at a lower price point. That value proposition is what's driving the sellouts. AWS has a huge installed base of Nvidia hardware to rent, but the custom chip line gives it a way to serve clients who want to optimize compute spending.
The stock, which sits at $258.63 with an Alpha Score of 65/100 on AlphaScala, is up on the news. The market has been slow to credit Amazon for the chip business, and that lag is the opportunity. Amazon and AWS cash in regardless of which AI trend wins, making it a stock to consider buying now.
Investors who missed Nvidia's 2009 run are watching for the next signal. Amazon's chip business is one place that signal is flashing, though the company is a fraction of Nvidia's size. For exposure to the AI compute buildout, AMZN stock page and NVDA stock page are worth tracking.
Amazon's position in the custom chip market is still early. Trainium4 won't ship for another year or two, and the competitive field includes Alphabet's TPUs and Nvidia's own custom offerings. But the sellout pattern suggests demand is real, and the run rate is the proof. The next catalyst is Trainium4's launch, which will show whether Amazon can keep the momentum going.
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