Amazon Develops Cheaper AI Chips to Compete with Nvidia

Amazon is developing its own AI chips to compete with Nvidia, aiming to lower costs and enhance performance for its cloud computing service, Amazon Web Services (AWS). The new chips, including the Graviton, Trainium, and Inferentia, promise up to 50% improvements in price and performance compared to Nvidia's offerings, as customers increasingly seek affordable alternatives. With AWS holding about one-third of the cloud market, this strategic move is part of a broader trend among tech giants like Microsoft and Alphabet, who are also investing in proprietary chips. Recent sales figures show AWS generated $25 billion in revenue for Q1 2024, reflecting a 17% year-over-year increase. During Prime Day, Amazon deployed a significant number of its custom chips, emphasizing its commitment to advancing AI and cloud capabilities. This shift may reshape the market landscape as demand for cost-effective AI solutions grows.