AWS Bets Big: Amazon's Million-GPU Deal with Nvidia Signals Massive AI Expansion

AWS secures a massive 1M GPU order from Nvidia for 2026-27, integrating Groq tech and custom chips to fuel its $600B revenue ambition, as analysts raise estimates.

Amazon Web Services (AWS) is making an unprecedented commitment to scaling its artificial intelligence infrastructure, securing an order for one million graphics processing units (GPUs) from Nvidia for delivery between 2026 and 2027. This colossal procurement agreement underscores the aggressive growth trajectory for AWS, which is reportedly guided by an internal target set by CEO Andy Jassy: achieving $600 billion in annual revenue. For context, AWS closed out 2025 with revenue of $128.7 billion.

Beyond Hardware: A Strategic Partnership

The significance of this deal extends far beyond a simple purchase order. AWS will also integrate Nvidia’s Spectrum networking chips and the newly acquired Groq chip technology. Nvidia secured access to Groq’s designs through a $17 billion licensing agreement with the AI chip startup at the end of 2025. The strategic plan involves deploying Groq chips alongside six other Nvidia chip types to create optimized systems for handling AI inference workloads.

A notable shift in strategy is evident in Amazon’s data center approach. Historically reliant on in-house networking technology, AWS will now incorporate Nvidia’s ConnectX and Spectrum-X networking equipment. This departure from tradition highlights the urgency of the company's capacity expansion.

The demand driving this move is substantial. In 2025, AWS constructed more data center capacity than any other company globally, adding over one gigawatt of power in the fourth quarter alone. Its year-over-year growth rate of 24% marked the highest pace in 13 quarters.

In-House Silicon: A Complementary Growth Engine

While the Nvidia deal captures headlines, Amazon continues to advance its proprietary chip development. The company’s own Trainium2 chip is claimed to offer a 30% to 40% better price-to-performance ratio than comparable GPUs. Its faster successor, Trainium3, is expected to be nearly fully booked by mid-2026. Combined with the Graviton CPU, Amazon’s custom silicon business now generates over $10 billion in annual revenue, growing at triple-digit rates. Prominent customers include leading AI firms OpenAI and Anthropic.

Analyst Confidence and Elevated Estimates

Market analysts are taking note of the scaled ambitions. Following a deep dive into AWS growth and margins, Evercore ISI has reaffirmed its Outperform rating on Amazon shares, maintaining a $285 price target. Analyst Mark Mahaney projects AWS revenue will reach $163 billion in 2026—a 27% increase—and climb to $214 billion in 2027, representing 31% growth. These figures put Evercore’s overall estimates for Amazon’s revenue and operating income 4% to 5% above the current market consensus.

Sentiment among covering analysts remains strongly positive. Of the 43 analysts who have issued ratings on Amazon over the past three months, 40 recommend buying the stock.

The Financial Weight of Aggressive Investment

This breakneck expansion carries a significant cost. Amazon has outlined capital expenditures of $200 billion for 2026, with potential to rise to approximately $250 billion by 2027. Evercore anticipates negative free cash flow of around $10 billion in each of those years. To help fund its plans, Amazon recently raised $36.9 billion through a bond issuance and placed a Euro-denominated bond worth €14.47 billion.

The market appears to be weighing these substantial near-term investments against future returns. Amazon's share price currently trades about 8% below its 200-day moving average, as investors await signs that the massive spending will translate into measurable free cash flow generation.