Amazon in talks to sell custom AI chips to outside companies, challenging Nvidia

Amazon is in talks to sell its custom-designed AI chips — its Trainium/Inferentia line — to outside companies, Bloomberg reported, a direct bid to undercut Nvidia's market dominance as GPU shortages and high prices squeeze AI builders. Until now Amazon's silicon has primarily powered its own cloud; opening it to external buyers would make Amazon a merchant chip vendor competing head-on with the company whose GPUs it also resells via EC2.

The move dovetails with bullish internal posturing. AWS SVP Peter DeSantis told CNBC that Amazon expects its own AI models to be competitive with frontier models from Anthropic and OpenAI within a year — a striking claim given Amazon has positioned largely as an infrastructure and Bedrock-distribution player rather than a frontier-model lab. At the same AWS Summit NYC, the company also announced Bedrock AgentCore updates and a Southwest Airlines cloud partnership.

The competitive logic is sound: NVIDIA just locked in $25 billion of high-grade bonds to fund the AI sprint and is tightening its grip on inference, but its pricing power and supply constraints leave room for alternatives. Amazon's scale, vertical integration, and existing cloud customer base make it one of the few players able to credibly offer a second source at volume.

The skepticism: custom silicon has repeatedly underdelivered against Nvidia's CUDA software moat, and 'in talks' is not a shipping product. DeSantis's one-year frontier-parity prediction is aggressive and unproven. Watch for named external chip customers and concrete benchmarks — those, not press talk, will determine whether this dents Nvidia.