Amazon Could be On the Cusp of Reshaping the Artificial Intelligence (AI) Chip Market. Should Nvidia Investors be Worried?

Amazon could be reshaping the AI chip market, raising the question of whether Nvidia’s investors should worry. The article notes that Amazon (NASDAQ: AMZN) began using its own Trainium AI chips in AWS about four years ago, and that Trainium2 launched in 2024 and Trainium3 is expected in 2025. It frames the shift as an effort to reduce reliance on Nvidia (NASDAQ: NVDA), which still supplies most data center GPUs, while other hyperscalers such as Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG) and (NASDAQ: GOOGL), and Meta also build their own chips. Reports suggest Amazon may sell Trainium chips to external customers. The piece argues that rack-scale stacking—144 Trainium3 chips in Amazon UltraServers—could match Blackwell-like performance at lower cost. Still, Nvidia’s software ecosystem, including CUDA, is cited as a long-term moat, and near-term demand is said to exceed supply.