Amazon’s Strategic Pivot: Gaining Control in the AI Arms Race

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Amazon is executing a decisive strategic shift, prioritizing long-term technological sovereignty over short-term financial optics. The tech behemoth is restructuring its supply chain for custom AI chips and implementing significant accounting changes, signaling a profound realignment to secure its future in the competitive cloud computing landscape.

In a move that underscores the breakneck pace of innovation in artificial intelligence, Amazon is revising its depreciation policy for critical infrastructure. Starting in 2025, the estimated useful life for certain server and networking equipment will be reduced from six years to five. This adjustment marks a notable departure from an industry trend where tech firms have sometimes extended asset lifespans to bolster earnings per share.

While this accounting change will lead to higher depreciation expenses and could pressure reported profits in the near term, analysts view it positively. It reflects a pragmatic acknowledgment that hardware powering AI applications becomes obsolete more rapidly than traditional data center gear, adhering to a "build and replace" model.

Reshaping the Semiconductor Supply Chain

Central to Amazon's strategy is a major overhaul within its Amazon Web Services (AWS) division, as detailed in a recent report from Benchmark Equity Research. AWS intends to replace its current partner, Marvell Technology, with Alchip Technologies for the production of its next-generation, in-house AI chips—specifically the Trainium 3 and Trainium 4 processors.

This pivot deepens Amazon's vertical integration. By partnering with a specialized provider of application-specific integrated circuit (ASIC) designs, the company is reducing its reliance on external semiconductor partners. Market observers interpret this not merely as a cost-optimization measure but as a crucial competitive maneuver against rivals Microsoft Azure and Google Cloud. Securing full control over its hardware roadmap is deemed essential for AWS to maintain and enhance its capabilities in the generative AI race.

Wall Street Maintains a Confident Stance

Despite the structural shifts and the potential for increased depreciation costs, sentiment on Wall Street remains favorable. Goldman Sachs has reaffirmed its "Buy" rating on Amazon shares. Analysts express confidence that the company can successfully monetize its substantial capital expenditures, irrespective of the ongoing supply chain adjustments.

The stock's performance reflects this steady outlook. Currently trading at approximately €196.86, shares showed minimal movement in today's session with a gain of 0.05%, holding firmly above the 200-day moving average.

The Forthcoming Financial Test

Investor attention is now turning to January 29, 2026, when Amazon is scheduled to release its fourth-quarter earnings. The report will be scrutinized for two key details: the tangible impact of the new depreciation rules on net income and any official updates regarding the Trainium chip roadmap. The market will closely monitor the progress of the partnership with Alchip, as any delays in chip availability could constrain AWS's capacity during a period of soaring demand for AI services.