Thank you for standing by. Good day, everyone, welcome to the Amazon.com First Quarter 2026 financial results teleconference. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question and answer session. Today's call is being recorded. For opening remarks, I will be turning the call over to the Vice President of Investor Relations, Mr. Dave Fildes. Thank you, sir. Please go ahead.
Hello, welcome to our Q1 2026 financial results conference call. Joining us today to answer your questions is Andy Jassy, our CEO, and Brian Olsavsky, our CFO. As you listen to today's conference call, we encourage you to have our press release in front of you, which includes our financial results as well as metrics and commentary on the quarter. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2025. Our comments and responses to your questions reflect management's views as of today, April 29th, 2026 only, and will include forward-looking statements. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings.
During this call, we may discuss certain non-GAAP financial measures. In our press release, slides accompanying this webcast and our filings with the SEC, each of which is posted on our IR website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Our guidance incorporates the order trends that we've seen to date and what we believe today to be appropriate assumptions.
Our results are inherently unpredictable and may be materially affected by many factors, including fluctuations in foreign exchange rates and energy prices, changes in global economic and geopolitical conditions, tariff and trade policies, resource and supply volatility, including for memory chips, and customer demand and spending, including the impact of recessionary fears, inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, and the various factors detailed in our filings with the SEC. Our guidance assumes, among other things, that we don't conclude any additional business acquisitions, restructurings, or legal settlements. It's not possible to accurately predict demand for our goods and services, and therefore, our actual results could differ materially from our guidance. Now I'll turn the call over to Andy.
Thanks, Dave. We're reporting $181.5 billion in revenue, up 17% year-over-year. Excluding the $2.9 billion favorable impact from foreign exchange, net sales increased 15%. Operating income was $23.9 billion. Q1 was a strong quarter for Amazon. Starting with AWS, growth continued to accelerate, up 28% year-over-year, the fastest growth rate in 15 quarters, up $2 billion quarter-over-quarter, the largest Q4 to Q1 AWS revenue increase ever. AWS is now a $150 billion annualized revenue run rate business. It's very unusual for a business to grow this fast on a base this large. The last time we saw growth at this clip, AWS was roughly half the size. We've never seen a technology grow as rapidly as AI.
Amazon is already a leader. Companies continue to choose AWS for AI. To put our growth in perspective, three years after AWS launched, it had a $58 million revenue run rate. In the first three years of this AI wave, AWS's AI revenue run rate is over $15 billion, nearly 260 times larger. There are several reasons customers are choosing AWS for AI. First, we've built broader capabilities than others. That includes model building with SageMaker, which reduces training time by up to 40%, high-performance inference with the leading selection of frontier models in Bedrock, which saw 170% growth in customer spend quarter-over-quarter. It processed more tokens in Q1 than all prior years combined. We're excited to make OpenAI's models available in Bedrock. Yesterday, we added OpenAI's GPT 5.4 model, with 5.5 coming soon.
Yesterday, we also started the preview of Amazon Bedrock Managed Agents, powered by OpenAI, the stateful runtime environment that enables any organization to build generative AI applications and agents at production scale. We believe that modern agentic applications will be stateful, and this new technology will rapidly accelerate agentic AI adoption. OpenAI has said they're already seeing unprecedented demand for this new product, and we're seeing heavy customer interest as well. Most of the value companies derive from AI will be through agents, and AWS customers can build agents with their proprietary data in Strands, which has been downloaded more than 25 million times and saw 3x more downloads quarter-over-quarter. Customers can deploy agents with enterprise scale, security, and reliability with AgentCore, which is being used to deploy an agent as frequently as every 10 seconds.
We also offer turnkey agents for coding, software migrations, business operations, and knowledge workers in Amazon Q, AWS Transform, Amazon Connect, and Amazon Q. They continue to resonate with customers. The number of developers using Amazon Q more than doubled quarter-over-quarter, and enterprise customer usage increased nearly 10x. Customers have used AWS Transform to save over 1.56 million hours of manual effort when migrating and modernizing their workloads. The number of new customers using Amazon Q has grown more than 4 times quarter-over-quarter, and we just announced V1 of our Amazon Q desktop app yesterday. It's very compelling, as it can query your email, calendar, Slack, local files, and several other applications you use every day to flag important communications, retrieve and summarize information, make recommendations, compose and send communications to others to create agents that highlight or automatically do work that you used to have to do yourself.
You can easily keep refining your preferences. Quake's advanced knowledge graph enables its AI agents to automatically learn from your interactions to become more personalized over time. One of our enterprise customers just told us, "Quake isn't just improving how we work, it's letting us reimagine it." Second, another reason customers continue choosing AWS, is that as they expand their use of AI, they want their inference to reside near their other applications and data, and much more of it resides in AWS than any place else. Third, as customers expand their AI usage, they also want to consume additional non-AI services. They're choosing AWS because we've built the broadest and most capable core offerings by a wide margin. We offer thousands of features across compute, storage, databases, analytics, security, and more. Gartner consistently recognizes AWS's leadership across their major cloud evaluation areas.
Fourth, AWS has the strongest security and operational performance of any AI and infrastructure provider, and startups, enterprises, and governments continue to choose AWS as the foundation for their most critical workloads. These are some of the reasons even more customers are choosing AWS. Just since last quarter's call, we've announced new agreements with OpenAI, Anthropic, Meta, NVIDIA, Uber, U.S. Bank, Fox, Southwest Airlines, U.S. Army, Bloomberg, Cerebras, AT&T, Nokia, Fundamental, the National Geographic Society, PGA Tour, and many more. Our chips business continues to grow rapidly and is larger than what a lot of folks thought. We saw nearly 40% quarter-over-quarter growth in Q1, and our annual revenue run rate is now over $20 billion and growing triple-digit percentages year-over-year. This somewhat masks the size.
If our chips business was a standalone business and sold chips produced this year to AWS and other third parties, as other leading chip companies do, our annual revenue run rate would be $50 billion. As best as we can tell, our custom silicon business is now one of the top three data center chip businesses in the world, the speed at which we've gotten here is extraordinary. We have momentum. For our custom AI silicon, we've recently shared very large multi-year, multi-gigawatt training commitments from the two leading AI labs in the world, Anthropic and OpenAI, as well as an increasing number of companies like Uber betting on Trainium. We now have over $225 billion in revenue commitments for Trainium. Our Trainium2 chip has about 30% better price performance than comparable GPUs and is largely sold out.
Trainium3, which just started shipping at the start of 2026 and is 30%-40% more price performant than Trainium2, is nearly fully subscribed. Much of Trainium4, which is still about 18 months from broad availability, has already been reserved. Amazon Bedrock, which is used expansively by over 125,000 customers, runs most of its inference on Trainium, and almost 80% of the Fortune 100 companies are using Bedrock. We also just announced that Meta is committed to using tens of millions of Graviton cores. Graviton is our industry-leading CPU chip, which allows Meta to run the CPU-intensive workloads behind agentic AI with the performance and efficiency they need at their scale.
AI is commonly seen as a GPU story, but the rise of agentic workloads, real-time reasoning, code generation, reinforcement learning, and multi-step task orchestration is driving massive CPU demand as well. As AI systems shift from answering questions to taking actions, and as post-training and inference scale up, the compute required pulls heavily on CPUs. That's why Meta chose Graviton, which delivers up to 40% better price performance than any other x86 processors, and now used by 98% of the top 1,000 EC2 customers. Nobody has a better set of chips across AI and CPU workloads than AWS with Trainium and Graviton, and we're unusually well-positioned for this AI inflection we're in the early stages of experiencing. While the largest number of AI chips we're bringing in are Trainium, we continue to have a deep partnership with NVIDIA.
We have immense respect for them, continue to order substantial quantities, we'll be partners for as long as I can foresee, and we will always have customers who want to run NVIDIA on AWS. We will also have a very large chips business ourselves. Customers always want choice. It's always been true and always will be true. Different companies will offer different benefits for customers, and the uniquely strong price performance that Trainium offers is compelling to our external and internal customers. For perspective, it's scale. We expect Trainium will save us tens of billions of dollars of CapEx each year and provide several hundred basis points of operating margin advantage versus relying on others' chips for inference. Finally, we continue to be confident in the long-term CapEx investments we're making.
Of the AWS CapEx we intend to spend in 2026, much of which will be installed in future years, we have high confidence this will be monetized well, as we already have customer commitments for a substantial portion of it, and that it will yield compelling operating margins and ROIC. As we've been sharing, the faster AWS grows, the more short-term CapEx we'll spend. AWS has to lay out cash for land, power, buildings, chips, servers, and networking gear in advance of when we can monetize it, typically 6 to 24 months before we start billing customers, depending on the component. However, these CapEx investments fund assets with many year useful lives, 30+ years for data centers, 5 to 6 years for chips, servers, and networking gear. The free cash flow and ROIC for these investments are cumulatively quite attractive a couple years after being in service.
However, in times of very high growth like now, where the CapEx growth meaningfully outpaces the revenue growth, the early years free cash flow is challenged until these initial tranches of capacity are being monetized and revenue growth outpaces CapEx growth. We've been through this cycle with the first big AWS growth wave and like the results. We expect to feel similarly about this next wave with much larger potential downstream revenue and free cash flow. I'll now turn to stores. Units grew 15% year-over-year, the highest we've seen since the tail end of COVID lockdowns. We continued expanding selection, including more than 600 new notable brands. Our grocery business continues to grow quickly across both perishables and non-perishables. With more than $150 billion in gross sales in 2025, we're now the second-largest grocer in the U.S.
We offer perishables delivered same-day alongside millions of other items in more than 2,300 cities and towns across the U.S., with more to come. Prime members are loving the convenience of getting fresh groceries alongside other products they're buying on Amazon. Perishable sales have grown over 40 times year-over-year and make up 9 of the top 10 most ordered items for same-day delivery where the service is available. Customer shopping same-day perishables build larger baskets, adding nearly 3 times as many items to their order, and spend over 80% more than customers who don't. Whole Foods Market also continues to accelerate, with over 550 stores today and 100 more coming in the next few years. We remain committed to meeting or beating other retailers on price.
In Q1, the average prices of products offered on amazon.com decreased compared to the same period last year. Prime Day will take place in most countries in June, which will bring Prime members even more savings across every category. We continue to find new ways to speed up delivery for customers in both cities and rural areas. We offer millions of items available for same-day delivery with Prime, up to 40 times the selection of a typical big box retail store, and we've delivered more than 1 billion items same day overnight so far this year. We're also making delivery even faster, recently announcing 1- and 3-hour delivery options on over 90,000 items, with 1-hour delivery available in hundreds of cities and towns, 3-hour delivery in 2,000+ cities and towns, and more on the way.
We continue to expand our ultra-fast delivery service, Amazon Now, which offers delivery in 30 minutes or less on thousands of items. It started last year in India, where orders are increasing 25% month-over-month, with Prime members tripling their shopping frequency once they start using it. The service is now available to tens of millions of customers across nine countries, with more to come as well. The stores team also continues to innovate and deliver for customers with AI. We launched Health AI, a 24/7 AI-powered personal health agent backed by One Medical clinicians that gives U.S. customers instant clinical guidance and takes action with their permission, from booking appointments to managing prescriptions to facilitating medical treatment with a real One Medical provider. Rufus, our agentic AI shopping assistant, continues to resonate with customers.
Rufus can research products, track prices, and auto-buy products in our store when they reach a set price. Monthly active users are up over 115%. Engagement is up nearly 400% year-over-year. We recently introduced a new AI experience for sellers in Seller Central that dynamically generates a custom personalized visualization of data, key insights, and scenarios tailored to the seller's goals. It's early, but the initial response and feedback are very strong. Moving on to Amazon Ads. We continue working to be the best place for brands of all sizes to grow their businesses. We're pleased with the continued strong growth across our full funnel offerings, generating $17.2 billion of revenue in the quarter and up 22% year-over-year.
Forrester recently recognized Amazon Ads as a leader in omni-channel advertising platforms with unmatched supply and insights for connected TV and commerce media. We deepened our Netflix partnership with Amazon Audiences, which enables advertisers to apply Amazon's exclusive signals from shopping, browsing, and streaming to Netflix's highly engaged viewers to reach the right audiences and drive even stronger performance. We also partnered with Comcast Advertising to expand local advertising to thousands of brands and expanded interactive video ad capabilities to partners starting with Samsung TVs. Our ads team also continues to invent and deliver for advertisers with AI. For example, we expanded Creative Agent, an agentic partner that plans and executes the entire ad creative process, to Canada, France, Germany, India, Italy, Spain, and the U.K. We recently introduced sponsored product and brand prompts in Rufus that help brands showcase products and customers make more informed buying decisions.
It's early, but we're seeing nearly 20% of shoppers who interact with a brand prompt in Rufus continue the conversation about that brand. We're also continuing to invent and see momentum in several other areas, and I'll mention a few. Starting with entertainment, moviegoers have flocked to Project Hail Mary with nearly $615 million in global box office to date. Its opening weekend was the second biggest for any non-sequel, non-franchise film in the last decade. We also surpassed 100 million viewers globally for the Culpables movie trilogy, with all three films reaching number 1 in more than 170 countries at launch. In live sports, we offered exclusive coverage of the NBA SoFi Play-In Tournament, with total viewership up 18% compared to last year on cable. Alexa+ early access expanded to millions more Prime members in Mexico, the U.K., Italy, and Spain.
Customers are loving Alexa+, talking to Alexa twice as much and for longer durations across a wider breadth of topics, completing purchases on devices three times more, streaming music 25% more, and using smart home functionality 50% more than Alexa. Zoox has now driven nearly 2 million miles and carried more than 350,000 riders. It's available to the public in Las Vegas and San Francisco. It's testing in eight other cities. We recently announced that Zoox will be available through the Uber app in Las Vegas and in Los Angeles in the future. Finally, Amazon Leo continues gaining momentum. With commercial service on track to launch in a few months, we already have meaningful revenue commitments from enterprise and governments, including Delta Air Lines, JetBlue, AT&T, Vodafone, DirecTV Latin America, Australia's National Broadband Network, DP World Tour, NASA, and others.
We also announced that we plan to acquire Globalstar, which will expand Leo's satellite network with direct-to-device capabilities, and we entered an agreement with Apple for Amazon Leo to power satellite services for iPhones and Apple Watches. We're in the middle of some of the biggest inflections of our lifetime, and Amazon has the culture, the know-how, and the resources to make so many customers' lives better and easier, and to build multiple new long-term businesses with substantial return on invested capital and free cash flow. We will continue investing and inventing to make it so. With that, I'll turn it over to Brian.
Thanks, Andy. Let's start with our top-line financial results. Worldwide revenue is $181.5 billion, a 15% increase year-over-year, excluding the 180 basis point favorable impact of foreign exchange. Worldwide operating income was $23.9 billion with an operating margin of 13.1%, our highest operating margin ever. Across all segments, we continue to innovate for customers while operating more efficiently. In the North America segment, first quarter revenue was $104.1 billion, an increase of 12% year-over-year. International segment revenue was $39.8 billion, an increase of 11% year-over-year, excluding the impact of foreign exchange. Our seasonal shopping events performed well in Q1, including our big spring sale.
We also saw particularly strong performance with third-party sellers, who are important contributors to our broad selection and competitive pricing. Our sellers saw strong sales growth in Q1, particularly in the U.S., as well as in Europe and Brazil, where we've recently lowered seller fees. We're seeing our investments in the seller experience resonate and, in turn, grow our business. Prime continues to fuel our growth and reflects the value members receive from the program. Prime Video is a key pillar of the Prime value proposition, an important driver of new member acquisition. Our investments in original and exclusive content and live sports, combined with our third-party partner titles, offer the best selection of premium video content. In addition to delivering compelling value to Prime members, advertisers, and partners, Prime Video is now a large and profitable business in its own right. Let's shift to segment profitability.
North America segment operating income was $8.3 billion with an operating margin of 7.9%. International segment operating income was $1.4 billion with an operating margin of 3.6%. We are pleased with the fulfillment network performance in Q1. The team has worked hard to optimize our network. Overall unit growth at 15% continues to outpace our cost to operate the fulfillment network as outbound shipping costs grew 12% year-over-year and fulfillment expense grew 9% year-over-year, both on an FX neutral basis. As our network efficiency improves, we're able to deliver items faster and improve the customer experience, while at the same time lowering our cost to serve.
Looking ahead, we see meaningful opportunities to further enhance productivity across our global fulfillment network, all while continuing to raise the bar in delivery speed. We will keep optimizing inventory placement to shorten distance traveled, reduce touches per package, and improve consolidation rates. Alongside these efforts, we deploy robotics and automation, which have been integral to our operations for decades. Our latest generation technologies offer a step change in efficiency, which we're deploying in both new and existing facilities. All of our U.S. large format fulfillment center launches in 2026 will have this latest generation technology. We're seeing early positive results with improved site safety, higher productivity, and lower cost to serve. Moving to our AWS segment, revenue is $37.6 billion and growth accelerated 480 basis points to 28% year-over-year, driven by both core and AI services.
We continue to see customers increase cloud migrations and scale their use of AWS core services. Customers seeking the full benefit of AI are accelerating their transition to the cloud. We also see a strong correlation between AI spend and core growth. As customers spend more on AI, we see a corresponding demand increase in core. We expect this to increase over time as customers move more AI workloads into production, strengthening demand for our core services. Our AI revenue is growing triple digits year-over-year. We're bringing more capacity online to meet high customer demand while also driving meaningful efficiency gains across our installed base. Our AI offerings continue to gain traction with customers, and Bedrock has been a significant growth driver. In 2025, we delivered 4x improvements in Trainium 2's token throughput.
Since the majority of Bedrock's workloads run on Trainium, these efficiency gains directly translate into more capacity to serve customers. AWS operating income was $14.2 billion and reflects our strong growth coupled with our focus on driving efficiencies across the business. Turning to total company capital expenditures. Our cash CapEx is $43.2 billion in Q1. This primarily relates to AWS and generative AI as we invest to support strong customer demand. We'll continue to make significant investments, especially in AI, as we believe it to be a massive opportunity with the potential to drive long-term revenue and free cash flow. I'll finish with our financial guidance for Q2.
The following guidance assumes that Prime Day occurs in the second quarter in most of our largest geographies, including the U.S., and that Prime Day occurs in the third quarter in Australia, Brazil, India and Japan. Note that in 2025, Prime Day was in Q3 for all countries. Q2 net sales are expected to be between $194 billion and $199 billion. We estimate the year-over-year impact of changes in foreign exchange rates based on current rates, which we expect to be a headwind of approximately 10 basis points in the quarter. Q2 operating income is expected to be between $20 billion and $24 billion. We continue to see strong sales trends carrying into Q2, and I'll mention a few items on the operating income guidance.
First, this estimate includes the impact of our seasonal step-up in stock-based compensation expense in Q2, driven by the timing of our annual compensation cycle. Second, within the North America segment, we do expect a year-over-year cost increase of approximately $1 billion related to Amazon Leo as we manufacture and launch more satellites in preparation for our service offering. Amazon Leo's commercial service is on track to launch in Q3, and we expect to begin capitalizing certain costs in Q4, including production and launch costs. Third, our guidance anticipates higher transportation costs related to fuel inflation, which is partially offset by the recently implemented fuel and logistics-related FBA surcharge. I'm thankful to our teams across the company for their hard work and dedication to customers. We remain focused on driving an even better customer experience, which is the only reliable way to create lasting value for our shareholders.
With that, let's move on to your questions.
Thank you. At this time, we will now open the call up for questions. We ask each caller to please limit yourself to one question. Thank you. If you would like to ask a question, please press star one on your keypad. We ask that when you pose your question, you pick up your handsets to provide optimum sound quality. Once again, to initiate a question, please press star then one on your touch tone telephone at this time. Please hold while we poll for questions. The first question comes from the line of Eric Sheridan with Goldman Sachs. Please proceed with your question.
Thanks so much for taking the question. You know, Andy, across an array of announcements you've made recently with AWS and reflecting upon what you wrote in the shareholder letter, can you talk a little bit about the needed levels of investment over the next couple of years to scale, compute, and capacity to meet your current state of revenue backlog and how we should be thinking about your unique approach to custom silicon and AI infrastructure that maybe positions you competitively to build that scale? Thanks so much.
Yeah. Well, to your point, Eric, we've made a lot of announcements over the last several months, and we're really pleased with the growth that we're seeing in AWS right now. You know, 28% year-over-year, fastest growth rate in 15 quarters for us. Haven't grown at this pace since we were about half the size. Growing 28% on a $150 billion annual run rate basis is not simple to do. I think there's a few things around it. You know, first is just we continue to see people choosing AWS for AI in part because of our really broad full stack functionality, in part because people want their inferences, they scale it to be close to their data and their applications. Much more of it lives in AWS than elsewhere.
In part because we have the strongest security and operational performance. You can see it in our numbers. It's leading to very substantial AI growth. At the same time, we're seeing very significant growth in our core business. Some of that are the migrations that have picked up from enterprises, from on-premises to the cloud. A lot of that is also, as AI growth is exploding, it turns out that it leads to a lot of core growth as well. You know, all the post-training, all the reinforcement learning, all the agentic actions and tool usage that these agents are using.
It fits with what you're asking about on the chip side, which is, because we have an unusual collection of chips, we have the leading CPU chip in Graviton, and we have the leading price performance, silicon, AI chip in Trainium, it means that we're really unusually well-positioned for the inflection that we're seeing and the type of growth that we're experiencing. You know, I don't have a new update on capital. Our plan is largely the same. We do view this as truly a once in a lifetime opportunity, where every application that we know of is gonna be reinvented. There are so many new applications that none of us have ever imagined or dreamed we could build that are starting to be built and will be built.
All that is gonna be built on top of AI with a lot of consumption of CPUs and core as well. I expect that we will invest a significant amount of capital over the coming years to pursue that opportunity, and that our customers, our shareholders, and Amazon in general are gonna be much better off down the road because we did so.
The next question comes from the line of Brian Nowak with Morgan Stanley. Please proceed with your question.
Great. Thanks for taking my questions. I have two. One is on the accounting side. We'll probably get it in the queue, but can you just give us an update on what the AWS backlog looks like and sort of any visibility on the breadth of that backlog beyond the big labs? That's the first one. The second one, as you sort of think about milestones for Rufus and agentic commerce for you in 2026, what are you most focused on making sure you accomplish on the agentic side this year, just to make sure you stay at the nice edge of the agentic commerce offerings? Thanks.
Yeah. On the backlog, the backlog, for Q1 is $364 billion. That does not include the recent deal that we announced with Anthropic for over $100 billion. There's reasonable breadth in that as well. It's not just one customer or two customers. On the agentic commerce milestone question, you know, we are very bullish on what agentic commerce will look like. I think it's gonna be very good for customers in the long term. I think it'll be good for us too. You can see some of that focus from us in what we're building with Rufus. If you haven't checked out Rufus in a while, it really substantially improved over the last year, and we have a lot of customers using it.
As I mentioned earlier, you know, you see the monthly active users up over 115% in Rufus and the engagement up over 400% year-over-year. You know, I think, while I think there will be, we'll do a lot of work with third-party horizontal agents to try and make that customer experience better. By the way, I do think today it reminds me in some ways the stage we're in of what we saw in the early days of search engines, and they're trying to refer business to e-commerce. You know, it's never been a giant part of the referrals to our e-commerce business. Over the years, the experience got better.
What you see with agentic commerce is it's a small fraction of what we see with the search engine referrals, but the experience just hasn't gotten great with these third-party horizontal agents yet. They're not often able to get the pricing right or the product information right. They don't have any personalization data or any shopping history. We do wanna see that get better with third-party horizontal agents. We're having conversations with all those folks to try and make that better and find something that works for customers and all the companies. It'll be interesting over time which agents customers choose to use.
I happen to think that if you're going to a particular retailer that you like to do business with and you like to shop from, if they have a great agentic shopping assistant, you're gonna often start there because it's where you're doing your shopping. They have better product information. They have better information about what other customers like you are buying. You can make all sorts of changes to how your account and your shipping information is working there. You know, that's what we're aiming to make Rufus be, is we're aiming to have it be the best shopping assistant anywhere, and I think we're on that path.
Thank you. The next question comes from the line of Justin Post with Bank of America. Please proceed with your question.
Thank you. I'd like to ask two, one on models and then one on training tips. On models, it looks like you might have access to the full suite of OpenAI models on Bedrock. Just wondering how big of an unlock that is and how focused maybe you are on your own Nova model. Second, shareholder letter mentioned you might be able to sell racks of Trainium. Just wondering, you know, with your capacity constraints, how you think about timing of that and how big of an opportunity. Thank you.
Yeah. On the models question, I think the fact that we're gonna have all the OpenAI models available in Bedrock is a big deal. It's a big deal for customers. You know, we have, we obviously have a very large amount of AI being done in Bedrock today on the models we have, and this is Anthropic and Llama and Mistral and, you know, a host of others. The one thing you learn over and over again with every technology, it was true in databases, it was true in analytics, it was true in models. It's true in chips too, by the way, is that customers want choice. There is not one tool to rule the world, and they want choice. Each of the models are better at some things than the other models.
People for a long time have wanted to consume OpenAI models in Bedrock. You know, we just enabled yesterday, the stateless model, the 5.4 model, and we'll enable the most recent 5.5 model in the next couple weeks. You know, most of the model work and most of the AI has been done in these stateless models, you know, kind of tokens in and tokens out. While I think there will continue to be a lot to work done that way, I think the future of using these models is a stateful model, a stateful API. That's because when you're building agents, you're building AI applications, you don't wanna start anew every time you interact with the model.
You wanna store state, you wanna store, you know, you wanna store identity, you wanna store what the conversation or the actions have been, you wanna reach out and do a little bit of compute here, you wanna have the tools be able to reach, you know, the models reach out to the different tools to accomplish different tasks. It only happens if you're able to store state. The Bedrock Managed Agents that we collaborated with and invented with OpenAI that we just announced a preview of yesterday is also. I think that's the future of how these agents are gonna be built. It's something that nobody else has, and I think it's very exciting to our customers. Of course, we'll have, you know, other models like Codex and things like that as well.
I think it's a big deal for customers, and I think it's gonna be good for our business as well. On the question about Trainium and the notion of our selling racks over time, I do think that's very much a possibility. You know, always we have to balance, we have such demand right now for Trainium, and we have such demand from various companies who will consume as much as we make, that we have to decide how much we're gonna allocate to the existing demand and customers, how much we're gonna save to sell as racks, and for our existing customers that we sell Trainium to, how many will be Trainium plus running on our cloud infrastructure versus just the chips themselves.
I expect over time there's a good chance we're gonna sell racks over the next couple years.
The next question comes from the line of Rob Sanderson with Loup Capital Markets. Please proceed with your question.
Yeah. Thank you. Good afternoon, and thanks for taking the question. I wanted to ask a little bit about Amazon Leo. Can you maybe help dimensionalize some of the, you know, the revenue opportunity in the consumer and in the enterprise space over the next few years? What are the governors on the ramp? Could you talk about types of new services that you will be able to develop with the Globalstar infrastructure and the spectrum that maybe you couldn't address before or would take you know, you can get to more, more quickly now? Then, you know, how expansive is the longer term vision?
You know, I know you're just beginning to launch commercial services, but, you know, over the long term, do you expect to include your non-communication services like orbital data centers or things like that as this becomes feasible in the decade ahead?
Yeah. I'll try and address as many of those questions as I can. You know, I am very bullish about Amazon Leo and the opportunity there. There are billions of people around the world who do not have access to broadband connectivity, and there are many thousands of businesses and government assets that people don't have visibility to because they don't have the right connectivity. It means that those entities can't do a lot of the things that we all take for granted today, including, you know, education online, business online, shopping or entertainment online, having constant visibility and digital twins. There's all these things that they can't do today. We think that Amazon Leo is gonna help solve that problem.
I think when we launch our service commercially, and we've got, you know, we just had another launch this week, so we have over 250 satellites in space. When we launch that service commercially, it will be one of two offerings that are on the current technology edge, and I think that we will have a meaningful advantage in performance. I think we'll be about two times better on the downlink than existing alternatives and about six times better on the uplink performance than existing alternatives. I think we'll have a cost advantage for customers.
For the governments and the enterprises, and we talk to a lot of them, and we have already signed agreements with many of them, even though we haven't launched the service commercially, you know, the latest of which was Delta Air Lines committing at least half of their fleet starting in 2028. When you talk to them, another really big part of what matters to them is they're gonna wanna take this data off of the satellite constellation, and they're gonna wanna store it in the cloud, and they're gonna wanna do analytics on it, and they're gonna wanna do AI on it. Just the combination of Leo with the leading cloud in the world in AWS is very compelling to enterprises and to governments.
You know, I think the, our only, you know, today, if you ask what stops us from growing the business, we have to get the constellation into space. We have over 20 launches planned this year. We have over 30 launches planned in 2027. I think the business has a chance to be a very large, you know, many billion-dollar revenue business, and I think it has some characteristics that are reminiscent of AWS in that it's capital intensive upfront, where you're committing a lot of capital and cash in the early years for assets that you get to leverage over a long period of time. I like the free cash flow and return on invested capital characteristics of that business in the medium to long term.
You know, the last thing I'll say about it is, you know, your question about Globalstar. You know, increasingly, what we're finding with consumers and enterprise and governments is that they don't like to have any periods where they don't have connectivity. It just upsets whatever customer experience they're going through. Even in metropolitan areas, we all hit certain parts of the highway where, you know, or certain roads where you can't get connectivity or you're hiking, you're skiing. Increasingly, we see very large demand for consumers to have direct-to-device, and that was really the impetus for our acquisition of Globalstar. They have unusual and scarce global spectrum that's required to provide direct-to-device. We also really like the satellite know-how that we'll get as part of that merger with Globalstar.
It also afforded us the opportunity to build a deep relationship with Apple. Who's gonna use our directive device for their iPhones and for their watches. Very optimistic about the business.
The next question comes from the line of Shweta Khajuria with Wolfe Research. Please proceed with your question.
Okay. Thanks a lot for taking my questions. Wonder, Andy, if you could please talk about, you know, how you're thinking about the increase in price for memory and storage and just the supply chain inflation we're seeing and the impact it could have in CapEx this year and potentially next year as well. On agentic commerce, if you could talk about how you view the opportunity with advertising. I have no doubt that Rufus could be the best shopping assistant available over time. For advertising opportunity, how do you view that if agents would be the ones taking action to shop? Thanks a lot.
On memory and storage, and the supply chain, I think everybody knows that the cost of these components, particularly memory, has skyrocketed. We're just in a stage where there's just not enough capacity for the amount of demand. We have worked very closely with our strategic partners. We saw this trend happening early, you know, in the kind of the middle of the latter part of last year. We've worked with our strategic suppliers here to get, you know, a significant amount of supply. We're working very closely with them. I think the team's been very scrappy. I think we've done a good job in making sure that we're not capacity constrained there. We watch that very closely.
You know, one of the interesting things that we see right now, with the change in price and in supply on things like memory is that it is a further impetus pushing companies who have on-premises infrastructure into the cloud. It's because in meaningful part, these suppliers are prioritizing their very largest customers, which cloud providers are. We have seen a number of conversations we've been having with enterprises for many months, where it's just been slower in getting the transformation plan to move to the cloud accelerate rapidly, just 'cause we have a lot more supply than what others have. It'll be interesting to see how that evolves over time.
It could have, you know, we're doing our best to kind of have the supply we need and keep the cost in the right spot. We'll see how that continues to evolve. I think on the agentic commerce and how that impacts advertising, you know, I actually believe that we're gonna we're gonna like this for advertising. I think it's gonna be good for customers, and it's gonna be good for our business. I think first of all, the first thing to remember is the way that our Ads team has built tools and agents themselves is making it so much easier to do advertising.
You know, if you look at small, medium-sized businesses that had to take, you know, weeks and months to do creative and to pick the right audience, all that is just, it's so much faster and so much easier because of our advertising agentic tools. You no longer have to take as much time or spend as much money building the creative. I think they're gonna be a lot more advertisers with the rise of what's happening in AI. If you look at the agentic commerce experiences, or you look at any of these agentic experiences, they tend to be multi-turn conversations, where you're not interacting with one search and getting an answer. You tend to find that you're asking questions, you're narrowing questions, it's asking you questions on what you want.
You know, in that process of having multi-turns, there are multiple opportunities to surface relevant products to customers, you know, many of which will be organic and some of which will be sponsored. You know, it also gives rise to opportunities like sponsored prompts. One of the interesting things that has been very successful for customers in our store has been when they ask certain questions, we give them a number of suggestions that are, that are, all created through AI. You know, we've gotten pretty good at also having sponsored prompts and that mix of questions and prompts that make it easy for people to keep digging deeper into what they're interested in. I actually believe that, advertising will do well in a world of agentic commerce.
Thank you. Our final question comes from the line of Colin Sebastian with Baird. Please proceed with your question.
Thanks very much. Good afternoon. Maybe a two-parter, if I could. Andy, first off, just wondering what you're seeing in terms of a trend between incremental AI demand from earlier adopters and larger AWS customers versus maybe how the demand curve is shaping up across the broader enterprise base. Then at a high level, if you think about the use of AI internally across Amazon's businesses, presumably the business overall looks very different in three or four years. Maybe, Andy, if you could contextualize where you see the most opportunity for the technology internally, both in terms of product as well as maybe driving more operating efficiency. I think that would be helpful. Thank you.
Yeah. On what we see in the incremental AI demand from early adopters versus broader enterprise base, it, there's, I think it's no secret that you've got, you know, the AI labs are spending an incredible amount of money on compute at this point, and compute both on the AI side as well as on the core side. The models that they're building and the companies that have successful generative AI applications are certainly spending a lot. There, you know, there's several of those labs. We also see quite a bit of enterprise adoption and usage of AI. You know, as I've said before, the largest absolute place that we see enterprises having success is in projects that are, you know, are around cost avoidance and productivities.
These are things like automating customer service or business process automation or fraud or things of that sort. The number of projects that we're working with across enterprises and that we're now starting to see to come to production around brand-new experiences, trying to figure out how to reinvent their current experiences, but using inference and AI to be smarter, also very significant. We're seeing the adoption of both of those segments. On the use of AI internally, you know, and for our current businesses, I think that, you know, the shortest first summary I could give you, Colin, is that I do not see a place in any of our businesses or any of the ways that we do work where we're not gonna have giant impact on what we do.
You know, I've long had this belief that, while you can add incrementally to a lot of your existing customer experiences, different agentic and AI experiences, I really believe that, you know, that in the fullness of time, and I don't know if that's three years from now or five years from now, or it could be sooner too, that all of these customer experiences we knew, we know are gonna be completely reinvented. They're gonna have different interfaces, they're gonna have different ways that people interact with them. People are gonna wanna have dialogue with them. I think it means that you have to look.
You know, it's tricky for if you have an existing business that's doing well, but you have to look at every single one of your customer experiences, and you have to be able to carve off resource for that team to think anew about what would the future customer experience look like if you started from scratch today, and if you had all the technologies like AI available to you when you started. That is what we're doing in every single one of our experiences. You know, I have a chance to be involved in some of those, it's really exciting. You know, there are experiences that may take a while for customers to get used to and to use over time.
You might find different segments like those AI forward experiences more than others early on. If you're not actually working on inventing those right now, I think it's gonna be very hard to have the business and the experience leadership that we want over a long period of time. Every single one of our consumer businesses, every single one of our businesses general is working on that. I would say internally, I also think that it's gonna radically change how we work. It already is. I mean just look at how coding, agentic coding is changing how we're all building products. I think it's gonna have a comparable impact on how we do DevOps and how we do customer service, how we do research, how we do analytics, you know, how sales is conducted.
I think every single one of these functions that we all do at work are gonna very significantly change, and that's another area of real focus for us. You know, we have this experience, I mentioned in my letter, but you know, if you look at one of our services, we swapped out the engine of the service while we were, you know, also running the service full tilt. Normally that would've taken 40 or 50 people about 1 year to do, and we took 5 really smart people, AI forward-thinking people building on agentic coding tools, and those 5 people rebuilt it in 65 days. Like that is a very different world of operating, and that's the world I think we're heading to over the next few years.
Thanks for joining us on the call today and for your questions. A replay will be available on our investor relations website for at least three months. We appreciate your interest in Amazon, and look forward to talking with you again next quarter.