Can Pricier AI Chip Rentals Accelerate Amazon’s AWS Revenue Growth?

October 2nd, 2026 · by Trefis Team
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Amazon is raising the prices it charges customers to rent AI chips through its cloud business. Management said in July that Amazon would lack the data center capacity to meet demand in 2026, and probably in 2027. Will the higher prices reach AWS revenue soon, when most of its AI capacity is already sold on multi-year contracts?

AMZN metrics > Market Cap $2.7T · Revenue $776B · Growth 15.8% · Op Margin 12.1% · P/E 19.8x

Image from Pixabay

What Happened

Amazon’s higher prices for renting out AI chips became public on October 2, 2026. It was reported the same day that Amazon is also moving Nvidia processors off its balance sheet. Both moves land in Amazon Web Services (AWS), the segment that rents out computing power to businesses.

What Changed

On its second-quarter 2026 call on July 30, management raised its 2026 cash capital spending plan to about $220 billion, from about $200 billion. The reason it gave was the higher cost of memory. Over the past twelve months, Amazon spent $173 billion on capital projects, more than the $161.4 billion of cash its operations brought in. Management said Amazon had issued debt in 2026 and would look at all options to fund AWS’s growth.

Demand for AWS chips was already strong before the price increase. Anthropic and OpenAI have made multi-year, multi-gigawatt commitments to Amazon’s own AI chip. Asked on the July call whether AWS margins can last, management credited efficiency gains and said the margins will fluctuate.

Two things are new. First, AWS customers will pay more to rent AI chips. Second, moving Nvidia processors off the balance sheet would give Amazon a funding option beyond debt.

How Big A Business This Impacts

The price increase lands in AWS, which had $128.7 billion of revenue in 2025, 18% of Amazon’s total. AWS turned 35.4% of that revenue into operating profit, and its sales grew 36.7% in the second quarter of 2026. Amazon’s AI revenue now runs at more than $25 billion a year and has at least doubled from a year earlier, management said. Most AI capacity is sold on contracts of at least five years, so higher prices will reach AWS revenue mainly through new contracts. Even if the higher prices lifted all of that AI revenue by a tenth, Amazon would gain only about $2.5 billion a year.

What Management Has Said

On that July 30 call, before the price increase, management said new AWS deals would reflect costs and that its spending would pay off:

  • “New agreements that you sign, you always take into account what your costs are.”
  • “At this level of spend and higher, we have clear line of sight to strong financial returns.”
  • “We have a lot of demand in front of us, and we’re going to invest in this business.”

The price increase is consistent with management’s July comment that new agreements take costs into account.

What to Watch

  • Amazon’s third-quarter report, expected on or around October 29, 2026: the first sign of whether AWS is charging the higher prices on new contracts.
  • The 2026 spending plan on that call: a figure below about $220 billion would be one possible sign of the Nvidia move off the balance sheet.
  • Microsoft and Alphabet, scheduled to report on October 27, 2026: their spending plans will show whether peers are still adding data centers.
  • Amazon’s next quarterly filings: they would show whether the Nvidia processors have left the balance sheet.

Bottom Line

The price increase is small against Amazon’s revenue today, since it touches only the AI part of AWS. It reaches AWS revenue mainly through new contracts and is consistent with what management told investors in July. Amazon’s report expected on or around October 29 will be the first to update the 2026 spending plan after both moves.

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