Amazon Web Services has achieved a $10 billion annual revenue run rate for its custom Graviton processors, more than doubling its year-over-year performance. The majority of new EC2 capacity deployments are now utilizing Graviton chips, demonstrating substantial enterprise adoption of the internally developed architecture.
The strong growth in Graviton chip adoption directly benefits Arm Holdings, which designs the underlying CPU architecture and receives royalty payments on each processor sold. Arm reported that its data center royalty revenue doubled during the most recent quarter, reflecting the broader industry shift toward custom silicon solutions for cloud infrastructure.
Analysts project that Arm's data center licensing revenue could surpass its traditional smartphone business within three years, marking a significant diversification of the company's revenue streams. This transition highlights the growing importance of custom processor design in the competitive cloud computing market, where major hyperscalers including Amazon, Google, and Microsoft are increasingly developing proprietary silicon to optimize performance and reduce costs.