Nvidia has been a prominent centerpiece when it comes to getting semiconductor exposure on the back of the artificial intelligence (AI) theme. But it could see competition from another Magnificent Seven peer: Amazon.
Per a Wall Street Journal article, Amazon’s cloud computing division known as Amazon Web Services (AWS) is working on an AI supercomputer chip cluster comprising a multitude of its own chips developed in-house. The chip will be used by one of its startup acquisitions, Anthropic, following a $4 billion investment.
“When ready in 2025, it will be one of the largest in the world for training AI models, according to Dave Brown, Amazon Web Services’ vice president of compute and networking services,” the Wall Street Journal reported.
Viable Alternative
Dubbed “Trainium,” Amazon’s chip could certainly challenge Nvidia for market share. With the technology to match or exceed Nvidia as well as the Amazon name behind it, Trainium can add a viable alternative to Nvidia’s chip offerings.
“Today, there’s really only one choice on the GPU side, and it’s just Nvidia,” said Matt Garman, chief executive of Amazon Web Services. “We think that customers would appreciate having multiple choices.”
Whether this upends Nvidia’s stock is anybody’s guess. The AI chipmaker has been one of the darlings of the AI-themed rally, gaining over 200% so far this year. Investors wondering if the stock still has more room for growth could look to the expansion of data centers to support AI platforms. This gives Nvidia another avenue for revenue growth to complement its chip business.
“While Nvidia’s business spans everything from gaming to autonomous vehicles to visualization tools like the Omniverse, its success in the data center business, driven by the explosive growth of AI, has stolen the narrative and now makes up the vast majority of Nvidia’s revenue,” Yahoo Finance noted.
3 ETFs for the Chip Wars
Amazon’s entry into chipmaking could certainly make it a viable competitor to NVDU for the AI semiconductor space. That said, traders could put single-stock ETFs like the Direxion Daily NVDA Bull 2X Shares (NVDU ) and the Direxion Daily AMZN Bull 1.5X Shares (AMZU ) on their proverbial radars should any more groundbreaking news push these stocks higher.
As opposed to trading specific stocks, traders can also opt for a broad-based move via the Direxion Daily Semiconductor Bull and Bear 3X Shares (SOXL ). The fund tracks the largest movers and shakers within the industry. Additionally, SOXL seeks daily investment results equal to 300% of the daily performance of the NYSE Semiconductor Index. That index is a rules-based, modified float-adjusted market-capitalization-weighted index that tracks the performance of the 30 largest U.S.-listed semiconductor companies.
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