Amazon, Alphabet, and Microsoft Are All Racing to Design Their Own AI Chips. Here’s What It Means for Nvidia.

Three of the largest buyers of Nvidia (NASDAQ: NVDA) chips are also three of the companies trying hardest to need fewer of them. Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), and Microsoft (NASDAQ: MSFT) each design their own AI processors now, and each is pushing that silicon deeper into the data centers it’s building at a breakneck pace.

It’s easy to read that as a problem for the company whose graphics processing units (GPUs) have been the default pick for AI work. On Friday, the market seemed to agree that the company faces some risks, with Nvidia shares falling about 6% in a broad semiconductor sell-off. But the companies building their own chips are also buying record amounts of Nvidia’s, and that contradiction sits at the center of the story.

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Amazon

Amazon has the most developed in-house chip story.

The e-commerce and cloud computing company’s custom silicon business — the Graviton processor, the Trainium AI chip, and the Nitro networking chip — topped a $20 billion annual revenue run rate in the first quarter of 2026.

“If our chips business was a stand-alone business and sold chips produced this year to AWS and other third parties as other leading chip companies do, our…