Nvidia’s stock has soared 145% over the past year, driven by its dominant role in AI chip technology. Nvidia GPUs are considered the industry standard for complex AI tasks, holding an estimated 80-95% market share. However, Amazon’s CEO Andy Jassy recently cautioned investors, noting that diverse AI needs mean no single chip will dominate every use case.
Amazon, which has a strong partnership with Nvidia, is developing its own AI chips, Trainium and Inferentia, to offer more cost-effective alternatives. Amazon’s custom chips aim to balance performance with cost efficiency, catering to companies that prioritize budget over speed.
Experts, including Morgan Stanley’s Joseph Moore, predict a rise in demand for custom AI chips as hyperscalers like Amazon, Google, and Meta focus on cost and energy efficiency. While Nvidia remains a leader, increased competition and pricing pressure could impact its market share and margins.