Amazon (AMZN) has entered a five-year partnership with data and AI startup Databricks to offer businesses a more cost-effective solution for building custom AI models. A key part of the collaboration is the use of Amazon’s custom-designed Trainium AI chips, which provide a more affordable alternative to Nvidia’s (NVDA) graphics processing units (GPUs).
Under the agreement, Databricks will use Trainium chips to power its Mosaic AI service, helping companies customize existing large language models (LLMs) or develop new ones. The collaboration also provides tools and support for managing AI applications while maintaining full control of their data and intellectual property.
Partnership Boosts AI Capabilities to Compete Better
This partnership positions Amazon and Databricks to compete more effectively against industry rivals such as Microsoft (MSFT), Snowflake (SNOW), and Salesforce (CRM), who are all vying to increase AI market share.
By combining Databricks’ expertise in AI tools with AWS’s robust infrastructure, the companies can boost their AI capabilities and lower the cost of developing and deploying applications. This partnership seeks to attract businesses in need of efficient and cost-effective AI solutions.
Is Amazon a Buy, Hold, or Sell?
Turning to Wall Street, AMZN has a Strong Buy consensus rating based on 45 Buys and two Holds assigned in the last three months. At $224.38, the average Amazon price target implies a 19.6% upside potential. Shares of the company have gained 23.53% year-to-date.
