How do Amazon's internal chips affect AMZN stock?

If successful in reducing costs, they could improve AWS profit margins, boosting AMZN stock.

Are other companies developing their own AI chips?

Yes, Google and Microsoft are also developing their own chips, but Amazon benefits from AWS's massive scale.

What risks does Amazon's chip strategy face?

Intense competition from NVIDIA and others, and development may take time to yield tangible results.

The Secret Chip That Could Power Amazon Stock Higher

Analysts suggest Amazon's secret weapon could be its in-house AI chips (Inferentia, Trainium), which may reduce costs and strengthen AWS's competitive edge, driving AMZN stock higher.

June 18, 2026

2 min read

Source: Trefis

While investors focus on Amazon's (AMZN) massive AI spending, analysts believe the real story may be the hardware the company is building for itself. Reports indicate that Amazon is heavily investing in custom chips like Inferentia and Trainium to power its AWS cloud services, potentially giving it a significant competitive advantage.

Details

Amazon has been developing its own AI chips for years, aiming to reduce reliance on suppliers like NVIDIA (NVDA). Inferentia chips are designed for inference, while Trainium is for training. These chips are already used within AWS to offer AI services at lower cost.

Context

These moves come amid surging demand for chips driven by the AI race. Companies like Google (GOOGL) and Microsoft (MSFT) are also developing their own chips. However, Amazon has an additional advantage in AWS's massive scale, allowing it to test chips at scale.

What It Means for Investors

If Amazon succeeds in reducing costs through internal chips, it could significantly improve AWS profit margins, positively impacting AMZN stock. However, risks remain as competition is fierce and development may take time.

Frequently Asked Questions

They are Amazon's custom AI chips: Inferentia for inference and Trainium for training, used in AWS to reduce costs.

Found this useful? Share it

This article was rewritten in Wrqti's editorial style based on information from the original source above. Content is informational only — not investment advice.