Amazon’s (NASDAQ:AMZN) re:Invent event, AWS’s annual flagship cloud computing shindig, is taking place this week, offering plenty to discover for anyone interested in all things cloud, innovative AWS solutions, and cutting-edge tech.
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Attending the keynote, Bank of America’s Justin Post, an analyst ranked in the top 1% of Street stock experts, thinks the noises made by the tech giant suggest it is “increasing focus on proprietary solutions.”
“We thought tone was upbeat, with broader & deeper product announcements vs. prior years and, while AWS still emphasizes customer choice, we noted a bigger focus on proprietary chips & foundational models,” the 5-star analyst said.
AWS CEO Matt Garman announced that Trn2 instances, powered by Amazon’s custom Trainium2 chips, are now generally available in AWS EC2 (Elastic Compute Cloud). He also revealed that Trainium3 chips, which will offer double the computing power and 40% greater efficiency, are expected to launch by late next year.
A representative of a tech giant peer was there to give the thumbs up, too. Apple’s Senior Director of Machine Learning and AI, Benoit Dupin, praised Amazon’s chip technology, and said that Apple is leveraging Trainium2 chips to develop its new Apple Intelligence AI products, and is achieving “up to 50% efficiency improvement in pre-training.”
Meanwhile, AWS announced the upcoming launch of P6 instances powered by Nvidia’s Blackwell chips, set to debut “early next year,” and expected to gain significant traction for generative AI applications. However, there appeared to be less emphasis on promoting Nvidia GPUs compared to last year’s event.
Amazon CEO Andy Jassy also unveiled Amazon Nova, a new suite of generative AI foundation models (GenAI FMs). The lineup features Canvass for image generation and Reel for video creation, with Nova models boasting 75% lower costs than competing GenAI FMs and seamless integration into the Bedrock platform. Amazon claims Nova models match or exceed competitors’ performance across most benchmark tests. Jassy also emphasized the impact of AWS innovations on Amazon’s retail business, driving both technological advancements and cost efficiencies.
Looking ahead, Post expressed optimism about AWS’s growth trajectory. With the increased availability of Nvidia GPUs and Trainium2 chips for workloads, coupled with growing demand for new GenAI capabilities, he foresees “potential for AWS revenue acceleration in 2025.”
To this end, Post rates a Buy rating on Amazon shares backed by a $230 price target, although that figure allows for 12-month returns of a modest 5%. (To watch Post’s track record, click here)
The Street’s average target is a bit higher; at $239, it makes room for gains of 9.5% over the one-year timeframe. Excluding one skeptic, all 45 other recent analyst reviews are positive, giving Amazon a Strong Buy consensus rating. (See Amazon stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
