Shares of tech giant Amazon (AMZN) fell today even though its Trainium AI chips are starting to attract more interest from developers who have usually relied on GPUs from chipmaker Nvidia (NVDA), according to The Information. Although Nvidia still dominates the AI accelerator market, its chips remain hard to get because demand from cloud giants, frontier AI labs, and other buyers is extremely high. That shortage is making some developers more open to alternatives from AMD (AMD), Amazon, Google (GOOGL), and others.
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High conviction AMZN bears now have this Tradr ETFInterestingly, the main barrier to using Trainium had always been weak software support. However, that problem has improved in the past few months, according to Daniel Svonava, CEO of Superlinked. Separately, Loka machine-learning lead Bojan Jakimovski said that interest in Trainium has picked up recently, partly because many customers still cannot easily access Nvidia GPUs. He added that one client moved its inference workloads to Amazon’s second-generation Trainium chips after testing showed costs could fall by up to 35% compared with Nvidia’s H100 chips.
Still, Trainium does not appear ready to replace Nvidia across every AI workload. Indeed, Jakimovski said that he would still recommend using Nvidia chips for large language model training, which remains one of the most demanding parts of AI development. Even so, Amazon CEO Andy Jassy recently said that Amazon’s custom chip business could generate $50 billion in annual revenue if it were a standalone company, and he called it one of the top three data center chip businesses in the world.
Is Amazon a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 45 Buys and one Hold assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMZN price target of $318.23 per share implies 24.3% upside potential.
