Amazon’s Dual-Path AI Strategy: Fortifying AWS While Deepening Nvidia Ties

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Amazon is making a decisive move in the global artificial intelligence race, using its AWS re:Invent conference to signal a powerful, two-pronged approach. The tech behemoth is simultaneously advancing its proprietary chip development and strengthening its critical partnership with industry leader Nvidia. This strategic balancing act aims to secure margins and reduce external dependencies, presenting investors with a complex but potentially rewarding roadmap.

The market's initial response to these strategic announcements has been measured. Amazon shares are currently consolidating around €198.50, showing little movement but holding firm above the 100-day moving average. Analysts suggest the next significant catalyst will arrive on January 29, 2026, when the company releases its fourth-quarter earnings. This report will provide early indicators of market adoption for Amazon's new AI infrastructure.

The positive third-quarter performance of AWS, which achieved an annualized revenue run rate of $132 billion, has set a high bar. Investors are now keenly watching for evidence that the division's substantial capital expenditures will translate into sustained long-term growth.

The In-House Silicon Offensive

A central pillar of Amazon's strategy is the aggressive expansion of its custom silicon portfolio within AWS. The newly available Trainium3 chips represent a direct effort to reduce reliance on external suppliers and lower costs for customers. By targeting price leadership in AI model training, Amazon is positioning itself as a formidable competitor in the foundational infrastructure market.

Market experts view this vertical integration as crucial for maintaining operating margins. In the capital-intensive AI sector, controlling core hardware technology is seen as essential for profitability despite the enormous upfront investment required.

Strengthening the Nvidia Alliance

In a classic example of "coopetition," Amazon is not severing its Nvidia relationship but rather deepening it. Alongside its own chip development, AWS is introducing new P6e GB300 UltraServers, which are built on Nvidia's advanced architecture. This pragmatic move allows Amazon to continue serving clients who demand maximum, cutting-edge performance from established technology.

This dual-track hardware strategy enables the cloud giant to address the entire market spectrum: catering to high-end customers with Nvidia's technology while also appealing to cost-conscious clients with its own, more efficient silicon solutions.

Software Advancements and Analyst Endorsement

The company's ambitions extend beyond hardware. On the software front, Amazon is launching significant new capabilities. The introduction of the "Nova" model family and "Kiro"—an autonomous AI agent capable of independent programming over extended periods—signals a shift toward what the company terms "Agentic Commerce."

The strategic announcements have garnered praise from analysts. Investment bank Citizens reaffirmed its "Market Outperform" rating on Amazon, attaching an ambitious price target of $300 per share. This endorsement underscores a belief in the financial logic behind Amazon's parallel-path approach in the competitive AI landscape.