Will Amazon's AI Chip Business Be a Threat to Nvidia?
It's still too early to give up on Nvidia.
Will Amazon's AI Chip Business Be a Threat to Nvidia?
Overview
According to reports, Amazon (NASDAQ: AMZN) is in early talks to sell its Trainium AI chips to external customers, rather than just stacking its own data centers with these in-house-made chips for the benefit of its cloud computing clients. This shouldn't come as a surprise: Amazon's CEO, Andy Jassy, had already said that the company could be moving in that direction. However, one potential loser from Amazon's decision to sell its AI chips is Nvidia (NASDAQ: NVDA), which will now face more competition for dominance in the AI chip market. Should Nvidia's shareholders be worried?
Image source: The Motley Fool.
Amazon started designing its own chips in-house for several reasons. First, to help decrease its exposure to Nvidia's hardware. As the market leader in offering best-in-class GPUs (Graphics Processing Units) for training and deploying artificial intelligence (AI) models, Nvidia has sometimes faced supply constraints. Amazon, and, for that matter, other hyperscalers, have found that custom-made chips can help them sidestep this issue. Second, for Amazon, relying on Trainium is often more cost-effective. According to the company, Trainium2 offers 30% better price performance than comparable GPUs.
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Originally published at www.fool.com.
