Amazon, Alphabet, and Microsoft Investing in Custom AI Chips
Amazon, Alphabet, and Microsoft are increasingly developing custom AI chips to reduce reliance on Nvidia. As part of this effort, they, along with Meta Platforms, are projected to collectively invest roughly $725 billion in capital expenditures by 2026, a 77% increase from the previous year. Despite this shift, Nvidia still generated $81.6 billion in revenue for the first quarter of 2027, an 85% year-over-year increase, with data center revenue up 92%.
Amazon’s custom chip division, including its Graviton and Trainium processors, achieved a $20 billion annual revenue run rate as of Q1 2026. The company also plans to spend about $200 billion on capital expenditures in 2026. Simultaneously, Alphabet’s collaboration with Blackstone aims to offer its tensor processing units as a cloud service, backed by an initial $5 billion investment. Microsoft is investing around $190 billion in capital expenditures in 2026, though it primarily relies on Nvidia’s GPUs for its Azure cloud services.
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