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· Posted on
November 27, 2024

"Hey Alexa, crush Nvidia": Amazon's $8 billion USD move to dominate the AI chip market

Amazon has announced it will be doubling its investment in its AI buddy Anthropic - investing another $4 billion USD.

What's the key learning?

  • Since the race for the development of AI began, Nvidia has been dominating this space for quite some time, making them "The Most Valuable Company" in the world right now.
  • Big Tech sees this revenue potential, and wants to dig in as well.
  • Not only can this be an income-generating stream, this can also be cost-efficient by manufacturing the chips in-house.

👉 Background: Amazon is known for its e-commerce marketplace, Amazon Prime and of course Alexa. But Amazon's real money-spinner is Amazon Web Services, which now generates 60% of its profit. Back in September 2023 and March this year, Amazon invested a total of $4 billion USD into a ChatGPT rival called Anthropic.

👉 What happened: Now, Amazon has announced it will be doubling its investment in its AI buddy Anthropic - investing another $4 billion USD.

👉 What else: While Anthropic already uses AWS as its cloud provider, Anthropic will now start to purchase its AI chips from Amazon and shift its AI chips away from Nvidia, which is currently dominating the AI-chip market.

What's the key learning?

💡In the AI arms race, owning the hardware is just as critical as building the software.

💡Nvidia is the market champion when it comes to AI chips... and nobody comes close yet. Right now, Nvidia’s biggest customers are AWS, Microsoft, and Alphabet. But these Big Tech companies don’t want to pay big bucks for someone else’s technology.

💡Amazon, Microsoft and Alphabet are working to develop their own AI chips. In fact, in 2015, Amazon acquired an AI chipmaker for $350 million USD. By investing in Anthropic, Amazon has created a perfect guinea pig for its new chips.

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