Amazon Internal Document Forecasts $612 Million Device Loss as Memory Costs Squeeze Margins

According to an internal planning document obtained by Business Insider, Amazon is forecasting a $612 million gross loss for its first-party devices business in 2026, significantly higher than the previous leadership target of a $438 million loss. The document states that rising memory costs are "putting pressure" on the business's profitability, forcing "difficult trade-offs" among sales volumes, average selling prices, and gross profit.

This projection highlights the transmission effect of the AI infrastructure boom on the consumer hardware industry. Surging demand for High Bandwidth Memory (HBM) from data centers has led manufacturers to allocate more capacity to higher-margin server products, tightening supplies and raising prices for DRAM and NAND flash used in consumer electronics. Amazon is not alone in facing this pressure; Apple, Microsoft, and Sony have also raised prices on certain hardware products recently.

Despite cost pressures, Amazon continues to expand its consumer hardware lineup, launching new Kindles, Alexa-powered tablets, and Bee brand AI wearables this month. However, the internal document identifies Bee and new smart glasses as strategic products still in an investment phase. Amazon has historically used low-cost hardware to pull customers into its broader shopping and digital content ecosystem, but rising component costs could make this strategy more expensive, potentially forcing the company to raise prices or adjust its product mix.

It is important to note that the $612 million loss forecast applies only to the gross profit level and does not account for operating expenses such as R&D, sales, and administrative costs. Additionally, Amazon is experiencing both sides of the AI boom: it expects roughly $220 billion in capital expenditures this year largely to expand AWS data centers, while its consumer hardware business faces squeeze from higher component costs.