Amazon.com Is in Talks to Sell AI Chips. Can It Rival Nvidia?

Amazon.com stock rose Thursday after the company confirmed it is in talks to sell artificial-intelligence chips and penetrate a booming market still dominated by Nvidia.

Amazon Web Services, the company’s cloud-computing arm, has opened discussions with potential customers looking to use its custom Trainium chips, Amazon’s AI chief Peter DeSantis told Bloomberg. DeSantis didn’t say who Amazon was negotiating with.

A company spokesperson described the talks to Barron’s as “exploratory early conversations,” but confirmed the interest from clients.

Amazon stock rose 2.9% on Thursday, while the S&P 500 rose 1.1% and the tech-heavy Nasdaq Composite gained 1.9%.

Amazon’s chip business has been more than a decade in the making after AWS acquired semiconductor startup Annapurna Labs in 2015. The Trainium custom accelerators have since played a significant part in AWS’s data centers, with clients like Anthropic paying hundreds of billions of dollars to use them.

By equipping other companies’ data centers, Amazon would be in direct competition with the makers of graphics processing units, or GPUs, like Nvidia and Advanced Micro Devices. The GPU market has been remarkably stable throughout the AI boom: Nvidia sells more than four in five AI accelerators, while AMD has emerged as aformidable number two.

“We have a strong partnership with Nvidia, will always have customers who choose to run Nvidia, and we will continue to make AWS the best place to run Nvidia. However, customers want better price-performance,” Amazon CEO Andy Jassy wrote in an shareholder letter in April. “Demand for Trainium is booming.”

Nvidia stock jumped 3% on Thursday. Shares of AMD surged 4.9%.

Trainium sales could give AWS another revenue stream to boost Amazon stock. Like other cloud-service providers in Meta Platforms, Oracle, and Microsoft, Amazon shares have lagged the broader market over the last year, with investors growing wary of the capital expenditures needed to build and equip data centers.

And even in if Amazon creates a chip business capable of helping its own stock, it may not have to siphon business from Nvidia to do so. In a research note earlier this week, J.P. Morgan projected that capital investments in AI accelerators would total $800 billion in 2030, up from just over $300 billion in 2026.

That’s a lot of new demand for Amazon, Nvidia, and whoever else to fulfill.