Will Amazon's AI Chip Business Be a Threat to Nvidia?
Key takeaways
- This shouldn t come as a surprise: Amazon s CEO, Andy Jassy, had already said that the company could be moving in that direction.
- In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
- Amazon started designing its own chips in-house for several reasons.
AMZN NVDA According to reports, Amazon (NASDAQ: AMZN) is in early talks to sell its Trainium AI chips to external customers, rather than just stacking its own data centers with these in-house-made chips for the benefit of its cloud computing clients. This shouldn t come as a surprise: Amazon s CEO, Andy Jassy, had already said that the company could be moving in that direction. However, one potential loser from Amazon s decision to sell its AI chips is Nvidia (NASDAQ: NVDA), which will now face more competition for dominance in the AI chip market. Should Nvidia s shareholders be worried?
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Amazon started designing its own chips in-house for several reasons. First, to help decrease its exposure to Nvidia s hardware. As the market leader in offering best-in-class GPUs (Graphics Processing Units) for training and deploying artificial intelligence (AI) models, Nvidia has sometimes faced supply constraints. Amazon, and, for that matter, other hyperscalers, have found that custom-made chips can help them sidestep this issue. Second, for Amazon, relying on Trainium is often more cost-effective. According to the company, Trainium2 offers 30% better price performance than comparable GPUs.