What Are Amazon Stock Bears Missing?

Amazon designs its own computer chips. That business may now be big enough to matter by itself. You probably picture Amazon as a giant store with a cloud arm. And you probably assume it buys its chips from someone else. Two things must be true for these chips to change how you see the stock. The first is size. The second is that owning the chips earns a return on the money Amazon is spending. Start with size.

How Big Is Amazon’s Chip Business?

Management gave a number on its fiscal Q2 2026 call. The chips business runs at an annual revenue rate of over $25 billion. The business is growing at triple-digit percentages year over year. The chips sit inside AWS, the cloud unit. AWS revenue was $42.2 billion in that quarter. Revenue was up 36.7% from a year earlier. Annualized, AWS runs at $169 billion. So the chips are a real business. They are still only a slice of AWS, not the whole of it.

Amazon designs several custom chips. Its flagship processor for…