Nvidia (NVDA.US) GPU replacement program won a big order! Amazon (AMZN.US) signs AI chip agreement with DataBricks

The Zhitong Finance App learned that Amazon (AMZN.US) has reportedly signed a five-year agreement with Snowflake (SNOW.US) competitor Databricks to allow the data warehouse company to use Amazon's Trainium AI chip.

The collaboration mainly revolves around Amazon's Trainium AI chip, which provides a cheaper alternative to Nvidia (NVDA.US) GPUs for companies looking to customize or build artificial intelligence models.

Amazon said the five-year agreement (terms not disclosed) may allow the company to spend less money to develop its artificial intelligence capabilities.

Databricks executive Naveen Rao said in an interview that the partnership with Amazon will make artificial intelligence faster and cheaper for businesses because it allows Databricks to pass on the cost savings of using Amazon AI chips rather than Nvidia chips that dominate the AI accelerator market.

Databricks wants to pass on the savings from Amazon chips to customers to break Nvidia's moat.

As part of the agreement, Databricks will also increase the use of Nvidia GPUs leased through AWS. According to Rao, AWS has generated over $1 billion in revenue for Databricks and remains the company's fastest-growing cloud partner.

Dave Brown of AWS said that Amazon's Trainium chips specifically designed for artificial intelligence tasks can help companies reduce AI development costs by 40%.

According to information, Amazon released the second version of its Trainium chip in November 2023. The company also has a series of artificial intelligence chips called Inferencia, which are also used to build and utilize artificial intelligence models.