Amazon’s AI Chip Breakthrough: How It’s Stealing Nvidia’s (NVDA) Thunder
Amazon just fired a shot across Nvidia’s bow—and the AI arms race just got hotter.
Custom silicon showdown
The e-commerce giant’s homegrown AI chips are gaining traction, threatening Nvidia’s stranglehold on the $200B accelerator market. No more begging for H100s—AWS now offers its own path to scale.
Why Wall Street’s sweating
NVDA bulls argue CUDA’s moat is unbreakable. But when hyperscalers like Amazon start baking their own silicon, even the most bulletproof narrative gets cracks. (Cue the ‘diversification’ PowerPoint slides from analysts.)
The cynical take: This is less about technology and more about margin preservation—because paying 90% gross margins to Jensen Huang was never sustainable. Game on.
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AWS is also planning to release its new Trainium3 GPU later this year. The current version, Trainium2, was already used by Amazon-backed AI startup Anthropic to train its Claude Opus 4 model. While Nvidia’s Blackwell GPU is said to be more powerful, AWS’ Gadi Hutt told CNBC that Trainium2 delivers better performance for the price. In addition, the upcoming Trainium3 will be even more efficient, using 50% less energy than Trainium2, therefore making it cheaper and greener to run.
Still, Nvidia has a big advantage thanks to its faster chips and its own programming system, called CUDA, which many developers use. If developers want to switch to AWS’ Trainium chips, they WOULD need to rewrite parts of their software and double-check that their AI models work the same way. Nevertheless, even though this switch takes effort, AWS’ growing chip performance and efficiency may soon make the effort worth the change.
What Is the Price Target for AMZN Stock?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Amazon stock based on 46 Buys and one Hold assigned in the past three months. Furthermore, the average AMZN stock price target of $241.64 implies 12.3% upside potential from current levels.
