Amazon stock rallied Wednesday, a day after unveiling new AI-related initiatives, including a new chip aimed to take on Nvidia. But Nvidia stock also posted gains, a sign investors are betting both tech giants can be winners in AI.
Amazon Web Services, the company's cloud-computing arm, announced that its Trainium2 AI chips are fully available, during its annual re:Invent conference Tuesday. The tech giant also touted a major customer for its chips: Apple is using AWS and its chips to train its AI models.
"It's fantastic to see how some of the most innovative companies anywhere in the world are leaning in, leaning into Trainium2 for their cutting-edge AI efforts," AWS Chief Executive Matt Garman said on stage at the Las Vegas conference. He also said Amazon will launch a more powerful Trainium3 chip late next year.
The announcements highlight Amazon's position as both a customer and competitor to Nvidia. Nvidia dominates the market for the graphics processing units that power AI models. Amazon essentially rents those chips out to its customers through it cloud business.
But Amazon, the largest cloud provider by market share, has also been working to offer its own chips at a lower cost. Garman said during his speech that Trainium2 offers "30% to 40% better price performance than current GPU-powered instances."
"Today, there's really only one choice on the GPU side, and it's just Nvidia," Garman told the Wall Street Journal on Tuesday. "We think that customers would appreciate having multiple choices."
On the stock market today, Amazon stock gained more than 2% to close at 218.16, a new record close. Nvidia gained 3.5% to close at 145.14.
Amazon Plans UltraCluster
Amazon also unveiled a new "Ultraserver" designed to connect 64 of its Trainium chips. Working with AI startup Anthropic, Amazon plans to build an "Ultracluster" of those servers in a single data center that will be among the world's largest for training AI models.
The first customer for the Ultracluster will be Anthropic, an AI developer in which Amazon has invested $8 billion.
The UltraCluster led a series of announcement over a keynote from Garman that also featured an appearance from Amazon Chief Executive Andy Jassy. Jassy led AWS before taking over the top job at Amazon from founder Jeff Bezos in 2021.
Jassy said Amazon is launching a series of generative AI models it calls Nova. The models can process text, images and video prompts, Jassy said, to create video and other multimedia content. He said the models will be available though AWS Bedrock, Amazon's AI development platform for enterprises.
The Amazon chief executive said the Nova models will be available alongside other options, including from Anthropic and Meta Platforms' Llama models.
"We think we've added some pretty interesting models to the mix today," Jassy said. "But the great thing is that all of these models are available for you at Bedrock, and you can use them in whatever combination you want. You can experiment and change over time, and we will give you that selection and that choice."
Amazon Adding Nvidia Options
While competing against Nvidia, AWS is also expanding its partnership with the tech giant. Garman said Tuesday that AWS will soon offer a P6 family of computing instances with Nvidia's Blackwell GPUs that will offer 2.5x faster compute power than its current generation of GPUs.
"AWS is by far the best place anywhere in the world to run GPU workloads," Garman said during his keynote. "Part of the reason is because AWS and Nvidia have been collaborating together for 14 years to ensure that we're really great at the operating and running GPU workloads."
However, BofA Securities analyst Justin Post wrote Wednesday that there was "less focus" this year on Amazon's collaboration with Nvidia. Last year, Nvidia Chief Executive Jensen Huang appeared on stage at the re:Invent conference.
This year, Post wrote, "Custom silicon were a big keynote focus and could also become more of a competitive cost advantage vs. other cloud service providers."
He added that the Nova models have "longer-term potential to reduce any perceived LLM capability advantages for Microsoft and Google" Post rates Amazon stock a buy.
Amazon Stock Up 40% This Year
The announcement comes as Amazon plans to spend more than $100 billion to build AI-capable data centers over the next decade, a big bet that AI will drive future cloud spending. It is competing against Microsoft, Google and others for that business.
While there was some investor skepticism about Amazon's ability to compete with Microsoft last year for AI, those concerns appear to be easing.
Shares surged to an all-time high above 218 following the announcement on Tuesday. Amazon stock has gained more than 43% year to date. That includes a 5.5% gain last week and another 5% increase so far this week.
