Amazon Says It Will Start Selling Its AI Chips to Other Companies in 2027
Andy Jassy just put a public deadline on a plan that could pull customers away from NVIDIA, but the terms Amazon left unspoken may matter more than the ones it announced.
Amazon (NASDAQ:AMZN | AMZN Price Prediction) Chief Executive Andy Jassy used the company’s third-quarter call on October 29, 2026, to put a date on a plan Amazon had only suggested at before. Speaking about Trainium, the AI chip Amazon has so far kept inside AWS, he said: “We believe we’re going to have a very significant business selling chips externally, and we’re going to start in late 2027.”
The stock responded to the full report, which included quarterly earnings as well as the chip news. Diluted EPS of $1.89 missed the $1.96 consensus, and shares fell 7.30% to $226.00 after hours. That compounded a 4.25% regular-session drop to a $243.79 close, which valued Amazon at $2.63 trillion.
The dominant supplier Trainium would compete with, NVIDIA (NASDAQ:NVDA), closed at $213.66, down 0.8%, before Amazon’s call began. Its after-hours price of $210.09 is too small a move to read as a verdict on Amazon’s plan. What matters for shareholders is how large outside chip sales become, given that Amazon will review the allocation each year and can quietly shrink it.
What Amazon Committed To and What It Left Out
The commitment is a stated plan with a start window of late 2027. Amazon named no outside buyer, price, volume, chip generation, or revenue target, and Jassy said it would review the balance “probably every year.”
The idea has been building for some time: Jassy’s April 9, 2026, shareholder letter said “it’s quite possible we’ll sell racks of them to third parties in the future,” and in June an AWS executive was reported to have confirmed early talks with unknown buyers.
Why Amazon Wants to Sell Chips at All
Jassy described the trade-off himself. A chip sold outright books revenue when it leaves inventory, while the same chip rented through AWS can earn more revenue and free cash flow over a five-to-six-year life.
Upfront cash matters because trailing 12-month free cash flow was a $42.4 billion outflow. Amazon repeated about $220 billion of 2026 capital spending and said it will “spend meaningfully more in 2027.”
Trainium and Graviton run at more than $25 billion a year, meaning the latest pace stretched over a full year. Customer revenue commitments rose more than 20 times year over year.
How Much This Threatens NVIDIA
The sharper threat is software, because Amazon open-sourced TorchNeuron so developers can run “existing PyTorch code” on Trainium without rewriting it, which undermines the CUDA lock-in that keeps buyers on NVIDIA.
Jassy said only two companies pair a large cloud with a chip good enough to sell. Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) TPU unit is the obvious comparison.
Scale still favors NVIDIA. Its data center revenue reached $89.02 billion in one quarter, up 117%, and AWS itself is deploying an additional 2 million NVIDIA GPUs.
Manufacturing supply is the main constraint. Jassy said advanced chipmakers share one manufacturer and “everybody gets an allocation,” so every Trainium sold outside is one AWS cannot rent against its $578 billion backlog.
Demand for Trainium is also concentrated. Anthropic reportedly pledged more than $100 billion of AWS spending over 10 years for up to 5 gigawatts of Trainium capacity, yet it also buys NVIDIA systems.
What Amazon’s Chip Plan Means for AMZN Shareholders
Amazon’s core cloud business remains its strongest support. AWS sales rose 39% to $46.0 billion, and fourth-quarter net sales guidance of $240 billion to $247 billion points to continued growth.
The chip plan adds a second way to turn heavy spending into cash, although bigger 2027 budgets could keep free cash flow negative. NVIDIA offers more direct exposure to AI chips, while Amazon combines the cloud and chip businesses in one company (we reverse-engineered what the biggest tech winners looked like early and put the pattern in a free Next Nvidia Playbook).
The trigger to check is Amazon naming its first outside Trainium buyer and price. If none appears before late 2027, AWS will likely remain the main driver of how the stock is valued.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
