Nvidia Stock Investors Just Got Great News From Amazon and Google

Semiconductor company Nvidia (NASDAQ: NVDA) has seen its share price increase nearly 1,000% since the launch of ChatGPT in late 2022. That event was the big-bang moment for the artificial intelligence (AI) boom, and the subsequent surge in Nvidia shares reflects its critical position in the burgeoning AI economy.

Specifically, Nvidia dominates the market for data center graphics processing units (GPUs) and accounted for 98% of shipments last year. GPUs speed up complex workloads, like training AI models, and running AI applications. Consequently, Nvidia has secured a monopoly-like market share in AI accelerators.

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To that end, Nvidia bears frequently highlight custom AI chips from big technology companies like Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) as cause for alarm. While both companies have designed custom silicon for their data centers, recent commentary should put Nvidia investors at ease.

Amazon Web Services (AWS) is the largest public cloud. It accounted for 31% of cloud infrastructure and platform-services spending in the third quarter, which is nearly as much market share as Microsoft Azure and Alphabet’s Google Cloud Platform combined. To better monetize demand for artificial intelligence, AWS has developed two custom AI chips.

Specifically, AWS Trainium is designed for training machine learning models, and AWS Inferentia is purpose-built to accelerate inference workloads. But AWS recently provided reassuring context for Nvidia shareholders. “We want to be absolutely the best place to run Nvidia,” said Vice President Dave Brown. “At the same time, we think it’s healthy to have an alternative.”

While AWS is clearly trying to grab market share, the attempt is half-hearted because the company is also leaning into its relationship with Nvidia. For instance, AWS was the first major cloud provider to offer Nvidia H200 GPUs, and management rarely mentions its Trainium or Inferentia chips without also highlighting the importance of its Nvidia partnership.

Amazon CEO Andy Jassy made that clear on the latest earnings call. “We have a very deep partnership with Nvidia. We tend to be their lead partner on most of their new chips,” he told analysts. “I expect us to have a partnership for a very long time.”

Alphabet’s Google Cloud Platform is the third-largest public cloud. It accounted for 13% of cloud infrastructure and platform-services spending in the third quarter. But the company is well-positioned to gain market share due to long-running investments in AI. Forrester Research recently recognized Google as a leader in AI infrastructure solutions.


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