Amazon projects $612 million loss in devices unit as memory prices surge
An internal Amazon document forecasts a $612 million gross loss for its devices business this year, driven by rising memory-chip costs and exceeding its $438 million target.
An August internal planning document reveals Amazon forecasts a $612 million gross loss for its first-party devices business in one outlet year, surpassing its leadership target of a $438 million loss. The shortfall is attributed to soaring memory-chip costs, which force tough choices among unit volumes, pricing and gross margin. Despite the loss outlook, Amazon launched several new consumer products in October, including updated Kindles, Alexa-powered tablets, Ring smart locks and AI wearables under the Bee brand, and has shifted its Fire tablet line to higher-priced Alexa Tablets.
The document also notes that Amazon raised prices on Echo speakers, Kindle e-readers and Fire TV devices in August, mirroring price hikes by Apple, Microsoft, Sony and PC makers facing similar memory-cost pressures. Meanwhile, Amazon’s cloud side is seeing a surge in AI-related spending, with Alexa+ projected to cost about $1.7 billion in 2026 and the Moonraker AI-agent project slated to spend over $100 million on GPUs this year, prompting internal talks of scaling back. The combined effect of rising component costs and expanding AI infrastructure puts additional strain on the retailer’s hardware strategy.
Why it matters
Rising chip prices threaten Amazon's hardware profitability and could lead to higher consumer prices across its ecosystem.
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