Amazon Just Committed to 2 Million More Nvidia GPUs, and the Stock Traded Lower

Key Points

• AWS will deploy 2 million additional Nvidia GPUs in 2027 and 2028, on top of the more than 1 million it committed to earlier this year.

• Amazon raised its 2026 capital spending estimate from about $200 billion to about $220 billion in July.

• AWS revenue grew 37% year over year in the second quarter, the segment’s fastest growth since 2021.

Amazon(NASDAQ:AMZN) got the kind of news on Wednesday that artificial intelligence (AI) infrastructure stocks usually rally on. Amazon Web Services (AWS) and Nvidia(NASDAQ:NVDA) announced that AWS will deploy 2 million additional Nvidia graphics processing units (GPUs) across its global infrastructure in 2027 and 2028. The commitment roughly triples the total the cloud giant had signed up for just five months earlier.

The market’s reaction split the two companies. Nvidia, which reported earnings this week, jumped almost 9% on Thursday. Amazon, however, slipped about 1.5%, trading at about $256 as of this writing.

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Which is it for Amazon shareholders: confirmation that demand for AI computing keeps outrunning supply, or 2 million more reasons to worry about a capital budget that already reached $220 billion this year?

The commitment roughly tripled in five months

At Nvidia’s GTC conference in March, AWS announced plans to add more than 1 million Nvidia GPUs starting in 2026. Since then, demand has exceeded those expectations, the companies said Wednesday. AWS now plans to deploy an additional 2 million GPUs (Nvidia’s Blackwell Ultra, Rubin, and Rubin Ultra chips) in 2027 and 2028. That takes the committed total from more than 1 million to more than 3 million.

“NVIDIA and AWS have built one of the great growth engines of the AI era, and demand is running ahead of every forecast,” Nvidia founder and CEO Jensen Huang said in the announcement.

The announcement reaches beyond the GPUs, too. The companies plan to build AI factories for the U.S. government, including 100,000 GPUs on secure AWS infrastructure.

And Amazon’s chip unit will work with Nvidia’s custom high-bandwidth memory technology in the next generation of Trainium, Amazon’s own AI silicon.

The bill was already $220 billion

Amazon’s capital spending was climbing before any of this. In February, the company estimated 2026 capital expenditures of about $200 billion, and it held that estimate in April. Then, on July’s earnings call, CEO Andy Jassy raised the figure to about $220 billion, citing the higher cost of memory.

The money is already being spent. Amazon’s purchases of property and equipment, net of what it gets back from sales and incentives, totaled $169 billion over the trailing 12 months as of the second quarter of 2026 — an increase of $66.1 billion year over year that the company ties primarily to its investments in AI. Operating cash flow rose 33% to $161.4 billion over the same stretch. And free cash flow swung to an outflow of $7.6 billion, down from an inflow of $18.2 billion a year earlier.

“Even at that amount, we will still not have enough capacity to meet all the demand we have in 2026, and I believe this dynamic will also be true in 2027, too,” Jassy said on the call. “In fact, the demand we already have for 2028 is striking.”

That timing matters here. The new GPUs arrive in 2027 and 2028, past the window this year’s budget covers. In other words, Wednesday’s commitment signals that spending stays elevated well beyond 2026.

Is the demand showing up in revenue?

It is. AWS revenue rose 28% year over year in the first quarter, then accelerated to 37% in the second, reaching $42.2 billion. It was the segment’s fastest growth since 2021.

Even more, the contracted side of the business is moving faster. AWS’s backlog of signed-but-not-yet-delivered work stood at $496 billion in the second quarter, Jassy said, growing at a triple-digit rate year over year. And AWS’s AI revenue run rate has climbed past $25 billion annually, also growing at a triple-digit percentage year over year.

After all, a company doesn’t triple a hardware commitment against demand it merely hopes shows up.

Why did the stock slip on the news, then?

Nvidia’s Thursday jump had a driver of its own — the chipmaker reported blockbuster quarterly results Wednesday afternoon. Amazon’s decline is the half that needs explaining, and the simplest explanation, I’d argue, is which side of the purchase order the company sits on. The same 2 million GPUs are future revenue for Nvidia and future spending for Amazon. And Amazon is the one whose free cash flow has already gone negative.

Sure, the outflow may widen before it reverses, and a $220 billion budget leaves Amazon little room to be wrong about where AI workloads are headed. Demand forecasts can miss.

But between the two readings of Wednesday’s news, I think the evidence sits with demand. AWS is accelerating, its backlog is growing at a triple-digit rate, and Jassy has said capacity, not demand, is the constraint through at least 2027. The dip doesn’t change any of that.

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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.