Can Amazon Take Market Share From Nvidia in the AI Chip Race? | The Motley Fool

Amazon (AMZN -0.95%) recently launched a new software tool that will allow its custom Trainium AI chips to run code written in the most popular AI coding language without modification. It’s a move aimed at boosting the potential for Amazon’s custom application-specific integrated circuits (ASICs) to take market share away from Nvidia‘s (NVDA -0.59%) widely used graphics processing units as demand for AI chips continues to swell.

Amazon isn’t the only tech giant working on its own AI chips for commercial use. Alphabet recently began making its custom AI chips available for sale directly to enterprises, rather than limiting them to being leased through Google Cloud. However, investors shouldn’t expect these developments to have a meaningful effect on Nvidia’s financial results.

Amazon has a relatively small chip business

Amazon’s AI chip business wrapped up the second quarter with a $25 billion annual revenue run rate. That’s not small, but it pales in comparison to the $96.2 billion in revenue Nvidia booked in its fiscal 2027 second quarter alone, or the more than $300 billion it booked over the past four quarters.

While Amazon’s push to commercialize its custom chips could boost sales, the largest tech companies are still rushing to buy Nvidia chips. That’s how Nvidia managed to produce 106% year-over-year revenue growth in its most recent quarter, and CEO Jensen Huang…