Amazon needed to make a strong showing in the field of artificial intelligence last week. And he did it with a little help from an unexpected friend.
The e-commerce giant also happens to own the world’s largest cloud computing business. In fact, Amazon’s subsidiary AWS (Amazon Web Services) today generates far more annual revenue than IBM and Oracle and ranks second only to Microsoft in the market for enterprise software and related services.
At the same time, however, in the field of creative artificial intelligence, Amazon is considered to have fallen behind its main competitor in the cloud computing space, given Microsoft’s aggressive penetration of this technology after the launch of ChatGPT a year ago.
So Amazon used AWS’s annual Invent conference last Thursday to make a big splash in the creative AI space. In fact, it introduced its own chatbot called Q, which looks like a business-oriented version of Microsoft’s Copilot.
What made the biggest impression, however, was the presence at the Las Vegas conference of Nvidia CEO Jensen Huang, who took the stage with AWS CEO Adam Selipsky to jointly announce an “expanded partnership” between the two companies. As part of this partnership, AWS will be the first cloud computing provider to offer services with Nvidia’s new H200 “superchips”, which will start shipping in the new year.
Tech company executives often show up at their competitors’ trade shows, usually without meaning to. However, this was the first time Huang appeared at the annual meeting of AWS, which, in recent years, has been one of Nvidia’s most important customers in the data center sector.
The move comes amid rumors of growing friction between the two companies, as Amazon has moved ahead of its cloud rivals by designing its own chips, while Nvidia has pushed ahead with its own cloud services. At the same keynote on Thursday November 30, Amazon unveiled the fourth version of its Graviton processor and the second version of its Trainium accelerator — which competes with Nvidia’s chips in training artificial intelligence models.
Amazon CEO Andy Jaycee boasted during the company’s third-quarter earnings call that Trainiums “have better value for money than other alternatives out there, and you can find them” – making a telling allusion to the known shortage of sought-after Nvidia chips; This further fueled speculation that Amazon may have fallen out with the supplier of a vital building block of artificial intelligence. Nvidia mentioned Microsoft 10 times in its earnings call last week compared to just one mention of Amazon.
The two companies need each other very much
Nevertheless, the truth is that the two companies need each other very much. Nvidia’s early moves in artificial intelligence have put it in a strong position, a success that even the in-house chips of established tech giants, which have the ability to design their own integrated circuits specifically for their own networks.
This was readily apparent in Nvidia’s recent financial results: the company’s data center sales have quadrupled over the past two quarters compared to the same period last year. According to the company, half of these sales come from cloud computing service providers.
Nvidia, however, has no room to cut ties with the market’s biggest buyer. Amazon’s total annual capital spending has been more than double that of Microsoft over the past four years, while market research firm Dell’Oro Group estimates that the data center’s share of Amazon’s capex totaled $29 billion last year – 39% above estimated spending. of Microsoft for the same year.
Nvidia also faces the possibility that its sales in China could take a serious hit due to new export restrictions, making it even more important to maintain a strong relationship with one of its biggest customers in the US. Domestic relations are of great value at this time.
