Amazon has recently made a strategic alliance as it continues to develop its AI roadmap. The current discussion around artificial intelligence centers on the “Magnificent Seven” stocks, with Big Tech companies making significant investments in AI over the past 18 months. Leading companies in this group include NVIDIA and Amazon.
Nvidia is a frontrunner in AI chips, holding an impressive 80% share of the market. The company designs GPUs that have various applications, from training language models to healthcare. While Nvidia seems to have a solid hold on the market, Amazon is making moves to potentially outperform the company in the long run.
Many big tech companies are exploring their own AI initiatives, including machine learning startup Hugging Face, which counts Amazon among its investors. Amazon is also developing training and inference chips like Trainium and Inferentia, which could reduce its reliance on Nvidia products in the future. Additionally, Amazon has invested in another AI startup, Anthropic, further solidifying its presence in the AI space.
With Amazon’s stock trading at a high price, some may see it as expensive. However, the company’s earnings growth has outpaced its stock price increase, making it technically cheaper than it was a year ago. This suggests that Amazon stock may be undervalued, especially considering its aggressive investments in AI.
Overall, Amazon appears to be a strong contender in the AI space, poised to take on industry giants like Nvidia. While Nvidia may remain a key player in the short term, Amazon’s strategic moves could position it for long-term success in the AI market.
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https://www.fool.com/investing/2024/06/01/did-amazon-just-say-checkmate-to-nvidia/