Amazon Web Services (AWS), which is part of tech and e-commerce giant Amazon (AMZN), revealed its plans for an “Ultracluster” – a massive AI supercomputer built with its in-house Trainium chips. It will also create a new “Ultraserver” to power advanced AI tasks. According to The Wall Street Journal, the Ultracluster will be ready by 2025 and will help AI startup Anthropic train models.
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Additionally, the Ultraserver is designed with 64 Trainium chips and rivals Nvidia’s (NVDA) GPU servers, which offers businesses a powerful alternative. In fact, AWS revealed that Apple (AAPL) is testing its chips for potential cost savings. By designing its own chips like Trainium2, AWS is looking to cut costs and reduce dependency on Nvidia, which currently dominates the AI chip market.
Amazon’s Chips Can Deliver Huge Savings
Interestingly, companies like Apple and startups like Poolside have reported saving up to 50% by using Amazon’s chips despite requiring more work to integrate them. AWS’ chip development is led by Annapurna Labs in Austin, Texas. Amazon also makes its chips through Taiwan Semiconductor Manufacturing Co. (TSM) and installs them directly into its data centers.
The firm’s goal is to make AI computing cheaper and easier for businesses without focusing on the hardware details. Indeed, AWS has created custom networking solutions like NeuronLink and partnered with companies like Databricks to hide the complexity of the systems at work while delivering high performance. This could be an interesting opportunity for AWS, as its CEO, Matt Garman, believes that its Trainium chips can carve out a niche for specific AI needs.
Is Amazon Stock Expected to Rise?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 45 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 47% rally in its share price over the past year, the average AMZN price target of $239 per share implies 12.16% upside potential.
