Green Asia

Commentary: Amazon makes a shrewd move in the AI arms race


With AI companies climbing over one another to get their hands on Nvidia chips, any possibility of a viable competitor comes as extremely encouraging news to the entire sector. If Anthropic, an AI frontrunner, can build and run cutting-edge models on Amazon’s chips, it sends a strong signal that Nvidia’s absolute dominance in AI won’t last forever. That’s excellent news for those who want to see development of this technology continue apace.

But to what degree Amazon’s chips can match Nvidia’s is unclear. In Monday’s announcement, Amazon and Anthropic said they would collaborate on further development. At the very least, Bloomberg Intelligence analyst Kunjan Sobhani suggested, AWS has become well-positioned to handle AI tasks that don’t necessarily require the full capabilities of Nvidia’s technology. “It’s like having a Ferrari and a BMW,” he said. “The Ferrari will get you there quicker, but you don’t always need it.”

The deal is unlikely to do much for Amazon’s revenue in the near term, a possible explanation for the stock’s rise of less than 2 per cent during the trading day. But Wall Street shouldn’t underestimate Amazon’s positioning here because it’s a pattern they should recognise from the company’s history.

As in retail, where Amazon slowly built up control of every part of selling online – sourcing products, running the store, handling logistics – so too is Amazon looking to be involved at every layer of the AI industry.

Its data centres and chips provide the raw computing power. Its AWS cloud services – such as Amazon Bedrock – are a trusted go-between between companies and the AI models they want to develop with. And it is also developing its own applications for using AI, such as the coding companion, CodeWhisperer, a competitor to Microsoft’s CoPilot. 

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