Amazon Surges 5.6% as CEO Andy Jassy Unveils Bold AI and AWS Growth Blueprint

Quick overview

Shares of Amazon.com (NASDAQ: AMZN) surged 5.6% on Thursday, closing at $233.65, as CEO Andy Jassy’s annual shareholder letter provided investors with the clearest picture yet of how those bets are paying off and offered a comprehensive defense of the company’s aggressive artificial intelligence expenditure.

As Wall Street processed a letter that analysts are already referring to as Jassy’s most significant to date, trading activity reached 64.9 million shares, or about 30% more than the three-month average.

Amazon’s AI Revenue Run Rate Surpasses Expectations

Many analysts were taken aback by the headline statistic from Jassy’s letter, which was a $15 billion yearly revenue run rate from AI services within Amazon Web Services. Reiterating his Outperform rating, Evercore ISI analyst Mark Mahaney described the revelation as a major beat. Mahaney had predicted between $5 billion and $10 billion.

When the company’s staggering $200 billion capital investment plan for 2026 was first revealed in February, investors were alarmed, but Jassy was adamant about defending it. He said, “We’re not investing approximately $200 billion in capex in 2026 on a hunch,” citing significant customer commitments previously made for AWS capacity that is anticipated to be profitable in 2027 and 2028. A $100 billion deal with OpenAI is one of those commitments.

Chip Business Doubles, Challenging Nvidia

The most startling discovery was perhaps the rapid expansion of Amazon’s custom silicon division. According to Jassy, the semiconductor segment now generates more than $20 billion in sales annually, which is more than twice as much as the $10 billion recorded as recently as Q4 of last year. According to Jassy, the company is “on fire” and is expected to expand well beyond what it had previously projected.

Earlier this year, Amazon started selling its Trainium 3 AI chip. Although AWS will continue to offer Nvidia infrastructure, Jassy positioned it as a direct price-performance alternative to Nvidia’s GPUs, pointing out that customers are increasingly seeking better value. One of the chip’s main clients is Anthropic, in which Amazon has spent $8 billion. Marvell Technology (MRVL), Amazon’s semiconductor partner, also profited, rising 3.8% on Thursday after a Barclays upgrade.

AWS Faces Rising Competition, But Holds Firm

Despite growing competition from Google Cloud and Microsoft Azure, AWS is still the biggest provider of cloud infrastructure worldwide. Given that AWS has a proven track record of rapidly making money off of its infrastructure investments, Jassy presented the $200 billion capex commitment as a strategic requirement rather than a risk.

William Blair, which upgraded Amazon to its Conviction List on Thursday, expressed optimism primarily due to the AWS growth reacceleration story and long-term margin potential through automation and robotics in retail. The company anticipates a 29% increase from present levels.

Amazon AWS Plans Beyond the Cloud

Jassy also discussed a number of additional areas of development in her letter. Amazon just signed a deal with Delta Air Lines for its satellite internet service, Amazon Leo, which is scheduled to begin later this year. In terms of retail, the number of consumers utilizing same-day delivery in rural areas has already risen thanks to a $4 billion investment in delivery infrastructure.

Additionally, Amazon stated that it will provide same-day delivery of Eli Lilly’s recently licensed GLP-1 obesity medication, Foundayo, through Amazon Pharmacy. This move places the corporation firmly in the rapidly expanding weight management sector.

Amazon (AMZN) Stock Technical Picture Improves

On the charts, Thursday’s surge had additional significance. For the first time since February 5, the day following a Q4 results announcement that sent shares plummeting, Amazon recovered its 200-day moving average. Following news of a two-week U.S.-Iran ceasefire on Wednesday, the stock momentarily broke above its 50-day line; nevertheless, Thursday’s advance represented a more significant technical recovery.

Later this month or early in May, Amazon is anticipated to release its first-quarter profits. Investors will be closely monitoring if the momentum can sustain now that the AI revenue thesis has gained significant attention.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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