Amazon Enters AI Chip Fray: A New Challenger to Nvidia

Nvidia (NVDA) has dominated the artificial intelligence (AI) chip market for years, but a new challenger has emerged to threaten its reign. The company that could potentially give Nvidia a run for its money is Amazon (AMZN), the world's largest e-commerce platform and cloud services provider.

Amazon's AI victories have been numerous, with applications in its e-commerce business and as an offering to its cloud customers through Amazon Web Services (AWS). In fact, AWS customers can find Nvidia's top GPUs and platforms on the platform, with Amazon chief Andy Jassy stating that 'We'll continue making AWS the best place to run Nvidia chips.'

However, Amazon is not just a customer of Nvidia; it has also developed its own AI chips, including Graviton central processing units (CPUs) and Trainium AI accelerators. These chips compete directly with Nvidia's GPUs, offering quality at reasonable prices that appeal to cost-conscious customers.

The demand for these custom chips is high, with Amazon reporting a $25 billion annual revenue run rate and triple-digit growth in Graviton and Trainium sales. In fact, Jassy mentioned the possibility of creating a standalone chip business in the future.