Amazon has recently joined the intensifying quantum computing race, unveiling its proprietary quantum chip, Ocelot.

The tech giant now competes head-to-head with cloud computing rivals Google, Microsoft, and others, all vying to dominate what many see as the next technological frontier.

Amazon, best known for its e-commerce empire, has evolved into a cloud computing powerhouse through Amazon Web Services, a division launched in 2006 that now generates over $100 billion annually.

With a market valuation exceeding $2 trillion, Amazon views quantum computing as a transformative opportunity to fuel the next phase of growth for AWS.

“There’s a … strong business case for AWS or Amazon to get involved with quantum computing,” Oskar Painter, director of quantum hardware for Amazon Web Services, told CNBC. “Quantum computing is very much in line with that sort of business model where you would have off-premise quantum computing resources that can be made accessible through the cloud.”

Much of the excitement around quantum computing stems from its long-term potential. Although commercial applications remain years off, McKinsey forecasts the market could reach $173 billion by 2040.

Amazon has developed a new chip in-house that features a scalable architecture, significantly cutting down the need for quantum error correction—by as much as 90%. This addresses one of the biggest challenges in quantum computing. Similarly, Google’s Willow chip, introduced in December, also made notable strides in reducing errors, marking steady progress toward more reliable quantum machines.

Ocelot’s chip uses “cat qubits,” inspired by Schrödinger’s cat thought experiment. According to the company, this design naturally suppresses specific types of errors, helping to lower the amount of quantum error correction needed.

“The heart of these quantum computing systems … it’s really this quantum processor” Painter said. “The details of how that happens is really what differentiates one hardware platform from another – and really is where the secret sauce is and where all the intellectual property is.”

Munster described quantum computing as a distinct and emerging pillar within the AWS cloud business, indicating it should be viewed as a standalone vertical—much like AI or data storage—reflecting its growing strategic importance and commercial potential.

“In the end, it will probably be solved and monetized through one of these big cloud platforms,” Munster said. “And AWS has a great shot at being successful there.”