Amazon’s Bedrock Now Dominated by Custom Chips - AMZN’s Bold Move to Slash AI Costs
Amazon just flipped the script on AI infrastructure - and the financial implications are massive.
The Custom Chip Revolution
Amazon's Bedrock platform now runs primarily on proprietary silicon, cutting dependency on third-party suppliers. This strategic pivot represents one of the most significant infrastructure shifts in cloud computing history.
Financial Firepower Unleashed
By controlling their own chip destiny, Amazon slashes operational costs while boosting profit margins. The move sends shockwaves through traditional semiconductor suppliers - because when you can build your own golden goose, why keep buying eggs?
Wall Street's watching this playbook closely. Another case of tech giants realizing they'd rather own the factory than keep renting tools from the neighbors.
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It is worth mentioning that Bedrock allows customers to use AI models from companies like Anthropic, and until now, it was unclear how much of the service was powered by Amazon’s in-house hardware. White’s comments suggest that Amazon is relying more heavily on its own technology, which could help reduce costs and improve profit margins. Unlike Nvidia’s GPUs, Trainium chips are not graphics processors. Instead, they are designed specifically to accelerate AI training and model inference.
By using more Trainium chips, AWS can offer cloud services at a lower price. In fact, AWS already sells Trainium-based servers at a significant discount compared to those that use Nvidia’s chips. However, Amazon isn’t the only company looking to reduce its reliance on Nvidia. For instance, Microsoft (MSFT) Chief Technology Officer Kevin Scott recently stated that the tech giant is planning to rely more on its own custom chips in the future.
What Is the Price Target for AMZN Stock?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Amazon stock based on 43 Buys assigned in the past three months. Furthermore, the average AMZN stock price target of $267.77 per share implies 23.3% upside potential from current levels.
