Amazon is now openly selling its Trainium and Inferentia AI chips to third-party customers, directly competing with Nvidia's data center GPU business. The move escalates the custom-silicon threat to Nvidia's near-monopoly margins, though NVDA's 71% gross margin and 65% YoY revenue growth suggest the moat remains intact for now.
AMZN's move into external AI chip sales diversifies AWS revenue streams and could structurally reduce its own Nvidia procurement costs while opening a new silicon-as-a-service revenue line — with $716.9B in revenue and 10.8% net margins, AWS infrastructure leverage makes this a credible long-term margin driver.
Nvidia's 71.1% gross margin and 65.5% YoY revenue growth reflect a CUDA software moat and enterprise lock-in that custom silicon from hyperscalers has repeatedly failed to dent at scale, and AMD's own purpose-built AI GPU effort remains a more direct competitive comparison than Amazon's nascent external chip business.