Amazon vs Google: Analyst Says Custom Chips Give Google an Edge

A five-star analyst at JMP, Andrew Boone, remains bullish on both Amazon (AMZN) and Alphabet (GOOGL), but highlights different AI opportunities for each tech giant. Amazon is benefiting from continued demand for Nvidia (NVDA) GPUs through Amazon Web Services, while Google's long-standing investment in custom AI chips could give it an advantage as the AI industry moves toward greater vertical integration.

Boone reiterated a Buy rating and $315 price target on AMZN, implying 20.7% upside potential. For Alphabet, Boone maintained his Buy rating but with a higher $515 price target, which implies 51.2% upside potential. Amazon's commitment to 2 million additional Nvidia GPUs for 2027-2028 will help AWS meet rising AI demand and drive higher cloud usage.

Boone noted that Google has a head start in custom AI chips, with its own TPUs developed years ago. This gives it greater control over the hardware used for its AI workloads. As other frontier AI companies like Anthropic and OpenAI develop their own AI chips, Boone believes Google's early lead could give Alphabet an advantage in cost, performance, and infrastructure as AI computing demand continues to grow.