Amazon (AMZN) Boosts AWS Portfolio With NVIDIA Collaboration
Amazon’s AMZN cloud-computing arm, Amazon Web Services (AWS), extends its partnership with NVIDIA NVDA to power its portfolio with generative AI technology.
NVIDIA Blackwell GPU platform, which was introduced at GTC 2024, will be available on AWS. Notably, the platform features GB200 NVL72, with 72 Blackwell GPUs and 36 Grace CPUs interconnected by fifth-generation NVIDIA NVLink.
This will aid in speeding up inference workloads for resource-intensive, multi-trillion parameter language models.
AWS strives to enable customers to explore new generative AI capabilities by delivering secured and advanced infrastructure, software and services. In this regard, AWS will offer NVIDIA GB200 Grace Blackwell Superchip and B100 Tensor Core GPUs.
Apart from this, AWS intends to provide Amazon Elastic Compute Cloud (EC2) instances, backed by NVIDIA Grace Blackwell GPU. These EC2 instances will feature the new B100 GPUs, which will be deployed in EC2 UltraClusters to accelerate generative AI training and inference.
In addition, Blackwell will be integrated with AWS Nitro System, Elastic Fabric Adapter encryption and AWS Key Management Service. This will help in providing end-to-end control of the training data and model weights.
Also, Amazon SageMaker will be integrated with NVIDIA NIM inference microservices as part of this collaboration to aid the price performance optimization of foundation models running on GPUs.
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AWS Portfolio Strength, Competitive Scenario
The latest move bodes well for Amazon’s concerted efforts to expand the AWS portfolio, which has been driving its cloud customer momentum. Moreover, AWS's strength has been acting as a key catalyst behind Amazon’s growth. AMZN shares have returned 74.9% over a year.
We believe that AWS’s solid customer base, on the back of its expanding portfolio, as well as data centers and cloud regions, will continue to help the company gain a competitive edge against its peers, namely Microsoft MSFT and Alphabet’s GOOGL Google.
Amazon, currently carrying a Zacks Rank #2 (Buy), accounted for 31% of the worldwide cloud provider market in fourth-quarter 2023, per the latest Synergy Research Group data. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Notably, AWS generated revenues of $24.2 billion (14% of total sales) in the same quarter, up 13% year over year.
Microsoft, which accounted for 24% of the market, is riding on solid momentum across its Intelligent Cloud business that reported $25.9 billion in revenues (41.7% of the total revenues), up 20% year over year in second-quarter fiscal 2024. The business is benefiting from the solid adoption of Azure, driven by strength in Azure AI. The Azure and other cloud service revenues grew 30% year over year. Microsoft is also making strong efforts to power its cloud capabilities with generative AI.
Google Cloud is contributing substantial growth to Alphabet's total revenues. Growing generative AI capabilities in the cloud, increasing data centers, availability zones and cloud regions are expected to keep boosting Alphabet's cloud position. Alphabet’s Google Cloud acquired 11% of the market, and reported revenues of $9.19 billion (10.6% of the total revenues) in fourth-quarter 2023, up 25.7% year over year.
Amazon’s Growing Generative AI Efforts
The extended collaboration with NVIDIA is in sync with Amazon’s growing efforts toward bolstering its generative AI.
AWS’s announcement regarding the general availability of its fully managed service called Amazon Bedrock, which provides seamless access to high-performing foundation models from AI companies through an API, remains noteworthy.
The company also made the Amazon Titan Embeddings model generally available. It added Meta’s Llama 2 to Amazon Bedrock as a new model, which will be available through API.
AWS offers a new capability of Amazon CodeWhisperer, which is designed to offer generative AI-powered customized code suggestions by leveraging an organization's internal codebase.
Growing generative AI efforts are expected to aid Amazon in capitalizing on the immense growth prospects in the generative AI market.
Per an Allied Market Research report, the global generative AI market’s value is likely to hit $191.8 billion by 2032, witnessing a CAGR of 34.1% between 2023 and 2032.
Amazon’s solidifying prospects in this promising market are likely to instill investor optimism in the stock.
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