Amazon’s Custom AI Chips Could Help It Take Some Market Share from Nvidia (NVDA)

Amazon Web Services (AWS), which is Amazon’s (AMZN) cloud computing division, has made progress with its own custom AI chips, and this could help the company gain ground in a market that is mostly dominated by Nvidia (NVDA). According to CNBC, AWS is preparing to announce a new version of its Graviton4 chip, which will offer fast network speeds of 600 gigabits per second. Interestingly, this chip was created by Amazon’s Annapurna Labs, and AWS is expected to reveal its release date before the end of the month.

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.

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