Tech giant Amazon (AMZN) is trying to convince its customers to use its artificial intelligence chip, Trainium, instead of Nvidia’s (NVDA) chips, according to The Information. To do this, Amazon Web Services (AWS) is offering a huge discount. Indeed, customers can get the same computing power as Nvidia’s H100 chips for just 25% of the price. This move is part of Amazon’s strategy to reduce its dependence on Nvidia and increase its profit margins.
Nvidia is currently the dominant player in the AI chip market, but Amazon’s move could put a dent in its position. Nvidia’s chips are powerful and widely used, and many software developers are accustomed to writing software for Nvidia chips. However, Amazon’s Trainium chip is less expensive to run and could be an attractive option for customers looking to save money. Still, it is worth noting that switching to Trainium would require developers to rewrite the software code, which would take time and may be too costly, depending on the operation.
Nevertheless, the company has made improvements to its programming tools in order to make it easier for developers to use Trainium. Additionally, Amazon’s experience in developing traditional server chips has led to more customers opting for the company’s own server chips in recent years versus those from Intel (INTC) and Advanced Micro Devices (AMD). As a result, this could give it a slight edge as it tries to take on Nvidia.
Which Stock Is the Better Buy?
Turning to Wall Street, out of the two stocks mentioned above, analysts think that NVDA stock has more room to run than AMZN. In fact, NVDA’s price target of $177.23 per share implies almost 52% upside versus AMZN’s 40.7%.
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