The advent of AI has led to one of the most significant rallies in the stock market. While the general tech industry is booming, Nvidia (NVDA) has emerged as a clear leader among the pack of tech stocks. The demand for GPUs (Graphics Processing Unit) in an AI-centric global outlook has led to a change in the tide of the tech industry. While Nvidia (NVDA) is currently the stock market leader, Amazon (AMZN) could quickly catch up. Let’s discuss why.
Why Amazon Stock Could Rival Nvidia
Nvidia’s (NVDA) surge over the last several years has been driven by its GPU production for AI platforms. Most companies are dependent on Nvidia chips for computing power. Amazon (AMZN) may soon change this dynamic with its purpose-built AWS Trainium chips. The company aims to offer a more cost-effective, energy-efficient alternative to traditional GPUs.
With an increasing “Nvidia tax” gripping the chip market, Amazon’s Trainium chips could become a lucrative alternative for many. The company could also bundle the Trainium chip with its AWS servers and provide a complete chip, server, and networking package that usher in a new direction for the company. There is also a lot of talk about Amazon selling its chips and server racks directly to third-party data centers
Amazon’s AWS service already commands substantial market control. If the company moves ahead with a mass roll out of its Trainium chips, it could propel Amazon’s market cap closer to Nvidia. AMZN stock prices could also balloon under such circumstances.
Also Read: Barclays Increases Micron Stock Price Target To $2000
However, there are risks in the AI market. Many experts, including Michael Burry, believe that the current market scenario is similar to that of the late 1990s dot com bubble. Over exposure to AI stocks could be risky if we are indeed in a bubble.