Amazon Challenges Nvidia in AI Market
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy AMZN?
Source: Fool
- Increased Market Competition: Amazon's shareholder letter highlights that its AWS Trainium chips offer better cost-performance compared to Nvidia's GPUs, indicating Amazon's potential in the AI computing space and posing a threat to Nvidia's market share.
- Customer Shift Trend: With 98% of its large clients now using Amazon's Graviton CPUs, CEO Andy Jassy believes that Trainium chips will achieve similar market penetration, intensifying competitive pressure on Nvidia.
- Significant AWS Profit Contribution: In Q4 2023, AWS accounted for 50% of Amazon's operating profits, with this figure rising to 66% in Q3, underscoring the critical role of cloud computing in the company's overall profitability.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in infrastructure in 2023, primarily for AWS, which is expected to drive future revenue growth and further solidify its leadership position in the cloud computing market.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 255.080
Low
175.00
Averages
280.01
High
325.00
Current: 255.080
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Amazon Commits $25 Billion Investment to Anthropic
- Massive Investment: Amazon has announced a commitment of up to $25 billion to AI startup Anthropic, which includes an initial investment of $5 billion and up to $20 billion tied to commercial milestones, significantly deepening their partnership and potentially enhancing Amazon's AI capabilities.
- Cloud Spending Commitment: In return, Anthropic has pledged to spend over $100 billion on Amazon Web Services (AWS) over the next decade, securing up to 5 gigawatts of compute capacity for training and running its Claude models, thereby strengthening Amazon's position in the cloud computing market.
- Strong Cash Flow: AWS revenue surged 24% year-over-year to $35.6 billion in Q4 2025, making it the primary driver of Amazon's operating income, and the partnership with Anthropic is expected to further boost this growth, enhancing overall profitability.
- Capital Expenditure Pressure: While Amazon plans to spend about $200 billion this year on infrastructure, primarily in AI, Anthropic's long-term commitment helps mitigate the risks associated with such capital outlays, alleviating investor concerns about short-term cash flow pressures.
See More
Amazon Challenges Nvidia in AI Market
- Increased Market Competition: Amazon's shareholder letter highlights that its AWS Trainium chips offer better cost-performance compared to Nvidia's GPUs, indicating Amazon's potential in the AI computing space and posing a threat to Nvidia's market share.
- Customer Shift Trend: With 98% of its large clients now using Amazon's Graviton CPUs, CEO Andy Jassy believes that Trainium chips will achieve similar market penetration, intensifying competitive pressure on Nvidia.
- Significant AWS Profit Contribution: In Q4 2023, AWS accounted for 50% of Amazon's operating profits, with this figure rising to 66% in Q3, underscoring the critical role of cloud computing in the company's overall profitability.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in infrastructure in 2023, primarily for AWS, which is expected to drive future revenue growth and further solidify its leadership position in the cloud computing market.
See More
Amazon Challenges Nvidia's Market Position with Custom Chips
- Amazon's Rise: Amazon's AWS and custom chips are rapidly gaining traction, with CEO Andy Jassy noting that their Trainium chips offer a 30% improvement in cost-performance over GPU training, posing a potential threat to Nvidia's market share.
- Customer Shift Trend: Following the launch of Amazon's Graviton CPU in 2018, 98% of its large clients have transitioned to using its custom-designed CPUs, and Jassy anticipates a similar shift in the GPU market, highlighting Amazon's competitive edge in chip design.
- AWS Profit Contribution: In Q4 2023, AWS accounted for 50% of Amazon's operating profits, while this figure reached 66% in Q3, underscoring the critical importance of AWS's rapid growth to Amazon's overall financial health.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2023, primarily for AWS infrastructure, which is expected to drive significant revenue growth in the future and further solidify its leadership position in the cloud computing market.
See More
Hyperscalers Accelerate AI Infrastructure Investments
- Surge in Capital Expenditure: By 2026, the top five U.S. hyperscalers, including Microsoft, Alphabet, Meta, Oracle, and Amazon, are projected to collectively invest $720 billion in AI infrastructure, marking a significant shift of AI technology from experimental phases to becoming a backbone of the global economy, reflecting strong confidence in future markets.
- Intensifying Market Competition: As demand for AI computing power skyrockets, hyperscalers must significantly invest in new data centers to avoid becoming mere utilities, ensuring they can deliver advanced services and maintain market share amidst fierce competition.
- Investment Strategy Divergence: Microsoft and Alphabet's AI infrastructure spending is closely aligned with their high-margin application layers, effectively attracting users and accelerating revenue growth, while their competitors' expenditures are more about maintaining existing market shares, lacking immediate growth drivers.
- Focus on Infrastructure Development: A substantial portion of the funding will be allocated to constructing data centers specifically designed for AI workloads, which will surpass traditional cloud campuses in power and cooling capabilities, ensuring they can meet the rapidly increasing demands of AI in the future.
See More
Top 5 U.S. Hyperscalers Project $720 Billion in 2026 Capital Expenditures
- Surge in Capital Expenditures: In 2026, Microsoft, Alphabet, Meta, Oracle, and Amazon are projected to collectively invest $720 billion in AI infrastructure, reflecting a strong demand for AI computing power and indicating a shift from experimental phases to becoming a backbone of the global economy.
- Infrastructure Investment Trends: The majority of this funding will be allocated to constructing data centers specifically designed for AI workloads, which will surpass traditional cloud campuses in power density and cooling sophistication, ensuring a competitive edge in the market.
- Microsoft and Alphabet's Advantages: The investments by Microsoft and Alphabet are closely aligned with high-margin application layers that can quickly convert into revenue, while their competitors' spending is more about maintaining existing market share, lacking immediate growth potential and facing greater risks.
- Intensifying Market Competition: As AI models rapidly evolve, any breakthrough by one hyperscaler forces others to follow suit to prevent customer migration, driving accelerated infrastructure investments across the entire industry.
See More
Nvidia and Broadcom's AI Chip Market Outlook
- Nvidia Growth Expectations: Nvidia reported a remarkable 73% revenue growth in its latest quarter, with projections of 79% and 85% growth in the next two quarters, indicating its dominant position in the AI market will strengthen further, potentially driving the Nasdaq to new highs.
- Broadcom Performance Surge: Broadcom's AI semiconductor division saw a 106% year-over-year growth in Q1 of fiscal 2026, reaching $8.4 billion in revenue, with CEO Hock Tan projecting over $100 billion in sales for its custom AI chip division by the end of 2027, reflecting strong market demand and growth potential.
- Amazon Cloud Computing Edge: Amazon's AWS division is gaining attention due to triple-digit revenue growth from its custom chips, with its Trainum3 chip sold out and Trainum4 nearly sold out, indicating that its strong performance in the cloud computing market will likely drive stock price increases.
- Optimistic Nasdaq Outlook: The Nasdaq Composite has rebounded to all-time highs after a more than 10% pullback, and it is expected to see further gains in the coming months led by AI stocks, particularly Nvidia, Broadcom, and Amazon, which are poised to be market leaders.
See More
Amazon Commits $25 Billion Investment to Anthropic
- Massive Investment: Amazon has announced a commitment of up to $25 billion to AI startup Anthropic, which includes an initial investment of $5 billion and up to $20 billion tied to commercial milestones, significantly deepening their partnership and potentially enhancing Amazon's AI capabilities.
- Cloud Spending Commitment: In return, Anthropic has pledged to spend over $100 billion on Amazon Web Services (AWS) over the next decade, securing up to 5 gigawatts of compute capacity for training and running its Claude models, thereby strengthening Amazon's position in the cloud computing market.
- Strong Cash Flow: AWS revenue surged 24% year-over-year to $35.6 billion in Q4 2025, making it the primary driver of Amazon's operating income, and the partnership with Anthropic is expected to further boost this growth, enhancing overall profitability.
- Capital Expenditure Pressure: While Amazon plans to spend about $200 billion this year on infrastructure, primarily in AI, Anthropic's long-term commitment helps mitigate the risks associated with such capital outlays, alleviating investor concerns about short-term cash flow pressures.
See More
Amazon Challenges Nvidia in AI Market
- Increased Market Competition: Amazon's shareholder letter highlights that its AWS Trainium chips offer better cost-performance compared to Nvidia's GPUs, indicating Amazon's potential in the AI computing space and posing a threat to Nvidia's market share.
- Customer Shift Trend: With 98% of its large clients now using Amazon's Graviton CPUs, CEO Andy Jassy believes that Trainium chips will achieve similar market penetration, intensifying competitive pressure on Nvidia.
- Significant AWS Profit Contribution: In Q4 2023, AWS accounted for 50% of Amazon's operating profits, with this figure rising to 66% in Q3, underscoring the critical role of cloud computing in the company's overall profitability.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in infrastructure in 2023, primarily for AWS, which is expected to drive future revenue growth and further solidify its leadership position in the cloud computing market.
See More
Amazon Challenges Nvidia's Market Position with Custom Chips
- Amazon's Rise: Amazon's AWS and custom chips are rapidly gaining traction, with CEO Andy Jassy noting that their Trainium chips offer a 30% improvement in cost-performance over GPU training, posing a potential threat to Nvidia's market share.
- Customer Shift Trend: Following the launch of Amazon's Graviton CPU in 2018, 98% of its large clients have transitioned to using its custom-designed CPUs, and Jassy anticipates a similar shift in the GPU market, highlighting Amazon's competitive edge in chip design.
- AWS Profit Contribution: In Q4 2023, AWS accounted for 50% of Amazon's operating profits, while this figure reached 66% in Q3, underscoring the critical importance of AWS's rapid growth to Amazon's overall financial health.
- Capital Expenditure Plans: Amazon plans to invest $200 billion in capital expenditures in 2023, primarily for AWS infrastructure, which is expected to drive significant revenue growth in the future and further solidify its leadership position in the cloud computing market.
See More
Hyperscalers Accelerate AI Infrastructure Investments
- Surge in Capital Expenditure: By 2026, the top five U.S. hyperscalers, including Microsoft, Alphabet, Meta, Oracle, and Amazon, are projected to collectively invest $720 billion in AI infrastructure, marking a significant shift of AI technology from experimental phases to becoming a backbone of the global economy, reflecting strong confidence in future markets.
- Intensifying Market Competition: As demand for AI computing power skyrockets, hyperscalers must significantly invest in new data centers to avoid becoming mere utilities, ensuring they can deliver advanced services and maintain market share amidst fierce competition.
- Investment Strategy Divergence: Microsoft and Alphabet's AI infrastructure spending is closely aligned with their high-margin application layers, effectively attracting users and accelerating revenue growth, while their competitors' expenditures are more about maintaining existing market shares, lacking immediate growth drivers.
- Focus on Infrastructure Development: A substantial portion of the funding will be allocated to constructing data centers specifically designed for AI workloads, which will surpass traditional cloud campuses in power and cooling capabilities, ensuring they can meet the rapidly increasing demands of AI in the future.
See More
Top 5 U.S. Hyperscalers Project $720 Billion in 2026 Capital Expenditures
- Surge in Capital Expenditures: In 2026, Microsoft, Alphabet, Meta, Oracle, and Amazon are projected to collectively invest $720 billion in AI infrastructure, reflecting a strong demand for AI computing power and indicating a shift from experimental phases to becoming a backbone of the global economy.
- Infrastructure Investment Trends: The majority of this funding will be allocated to constructing data centers specifically designed for AI workloads, which will surpass traditional cloud campuses in power density and cooling sophistication, ensuring a competitive edge in the market.
- Microsoft and Alphabet's Advantages: The investments by Microsoft and Alphabet are closely aligned with high-margin application layers that can quickly convert into revenue, while their competitors' spending is more about maintaining existing market share, lacking immediate growth potential and facing greater risks.
- Intensifying Market Competition: As AI models rapidly evolve, any breakthrough by one hyperscaler forces others to follow suit to prevent customer migration, driving accelerated infrastructure investments across the entire industry.
See More
Nvidia and Broadcom's AI Chip Market Outlook
- Nvidia Growth Expectations: Nvidia reported a remarkable 73% revenue growth in its latest quarter, with projections of 79% and 85% growth in the next two quarters, indicating its dominant position in the AI market will strengthen further, potentially driving the Nasdaq to new highs.
- Broadcom Performance Surge: Broadcom's AI semiconductor division saw a 106% year-over-year growth in Q1 of fiscal 2026, reaching $8.4 billion in revenue, with CEO Hock Tan projecting over $100 billion in sales for its custom AI chip division by the end of 2027, reflecting strong market demand and growth potential.
- Amazon Cloud Computing Edge: Amazon's AWS division is gaining attention due to triple-digit revenue growth from its custom chips, with its Trainum3 chip sold out and Trainum4 nearly sold out, indicating that its strong performance in the cloud computing market will likely drive stock price increases.
- Optimistic Nasdaq Outlook: The Nasdaq Composite has rebounded to all-time highs after a more than 10% pullback, and it is expected to see further gains in the coming months led by AI stocks, particularly Nvidia, Broadcom, and Amazon, which are poised to be market leaders.
See More
