Amazon.com Inc. (NASDAQ:AMZN) is preparing to introduce its newest artificial intelligence chips in December. His strategic move aims to leverage Amazon's significant investments in semiconductors and reduce reliance on Jensen Huang's Nvidia Corp. (NASDAQ:NVDA).
What Happened: Amazon's cloud division is focusing on custom chip development to boost data center efficiency and cut costs for itself and its Amazon Web Services (AWS) clients. The initiative is spearheaded by Annapurna Labs, a chip start-up acquired by Amazon in 2015 for $350 million. The upcoming "Trainium 2" AI chips are designed for training large models and are already being tested by companies like Anthropic, Databricks, and Deutsche Telekom, the Financial Times reported on Tuesday.
Dave Brown, AWS's VP of compute and networking services, highlighted the significance of offering an alternative to Nvidia's dominance in the AI processor market.
"We want to be absolutely the best place to run Nvidia," he said. "But at the same time we think it's healthy to have an alternative."
Amazon's capital spending is expected to reach $75 billion in 2024, with a large portion dedicated to tech infrastructure, up from $48.4 billion in 2023, reflecting the AI investment trend among major cloud providers.
Why It Matters: Amazon's move to launch new AI chips is part of a broader strategy to strengthen its position in the AI market. The company is reportedly considering a second multi-billion-dollar investment in AI startup Anthropic, which utilizes Amazon's cloud services for training. This follows an initial $4 billion investment last year, with Amazon encouraging Anthropic to use its chips.
In October, Amazon signed a five-year deal with Databricks to provide cost-effective AI-building capabilities, positioning its Trainium AI chips as a cheaper alternative to Nvidia's GPUs.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
