Amazon plans to compete in AI chips

Investing.com — Amazon is setting its sights on a new venture: reducing its dependence on Nvidia (NASDAQ:) by developing custom AI chips.

According to a Bloomberg report, the effort is taking place in an engineering lab in Austin, Texas, where Amazon (NASDAQ:) engineers are working to challenge Nvidia’s dominance in the $100 billion AI chip market.

The project, described by Bloomberg as a “moonshot,” aims to enhance Amazon’s self-reliance in training and inference chips for artificial intelligence applications.

The lab, according to the Bloomberg report, features a startup-like atmosphere, with engineers tinkering with circuit boards and cooling systems to refine the chips that could power future AI workloads.

However, analysts suggest Nvidia’s market leadership is far from being dethroned. Mizuho (NYSE:) noted that while such reports often generate buzz, they rarely signify immediate risks to Nvidia’s position.

“The media and press loves to try and create major buzz and a stiff every single month about threats against NVDA’s dominance in chips for AI,” Mizuho said.

They added that similar stories emerge frequently, but they do not imply an imminent challenge to Nvidia’s chip supremacy.

Bloomberg’s report highlights the stakes in the growing AI market. Nvidia, which controls the lion’s share of GPU production for AI, remains the go-to supplier for training and inference tasks globally.

Despite Amazon’s ambition, Mizuho cautioned against overestimating the impact of these developments on Nvidia’s competitive edge.

“Every time I read these articles they pretty much say the same thing, are not new news, and should not be viewed as any immediate threat or risk to NVDA,” they added.