Amazon (NASDAQ: AMZN) is aiming to challenge Nvidia’s (NASDAQ: NVDA) dominance in the artificial intelligence space by planning to launch its custom-made chips.
Reports indicate that Amazon’s Annapurna Labs is ramping up AI chip production as part of the company’s push to reduce reliance on Nvidia. The chip, dubbed Trainium 2, is nearing market launch, having undergone testing with other key industry players, such as Anthropic and Databricks.
If successful, Trainium 2 is expected to help Amazon cut AI costs—a concern raised by investors after the company revealed plans to invest more heavily in the sector during its Q3 earnings report.
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To put this into perspective, Amazon projects spending $75 billion on technology in 2024, an increase of $48.4 billion from 2023.
AI predicts AMZN stock price
If Amazon successfully cuts costs, it could boost company income and potentially increase investor confidence. With this in mind, Finbold turned to OpenAI’s ChatGPT-4o to determine how a successful launch of the AI chip could impact AMZN stock.
According to ChatGPT, if the AI chip strategy pays off, AMZN could see incremental gains, especially if the company achieves further cost reductions.
Given Amazon’s impressive rally in 2024, the fundamentals could drive the stock higher. In this case, ChatGPT projects AMZN stock could rally to trade between $240 and $260 by late 2024.
On the flip side, ChatGPT-4o noted that if AI chip adoption falls short or the broader tech market corrects, Amazon’s stock could trade in the range of $210 to $230. Interestingly, this value remains higher than AMZN’s current valuation.
What next for AMZN stock price
At press time, Amazon stock was trading at $208, marking a slight gain of almost 1% over the past 24 hours. Year-to-date, AMZN has surged almost 39%.
On the other hand, in an X post on November 12, pseudonymous stock analyst Palvos D noted that Amazon stock is consolidating within key Fibonacci levels, with immediate support around $205.38 (38.2% retracement) and $203.28 (50% retracement). A further drop could be seen in Amazon testing the 61.8% level at $201.18.
Technical indicators show mixed signals, with the Relative Strength Index (RSI) hovering around 55, suggesting balanced momentum.
Besides AI chip advancements, Amazon still faces other vital fundamentals, such as demand for its cloud services. The company controls a significant share of the global cloud services market, which remains integral to its growth.
Meanwhile, Wall Street analysts have varied outlooks for Amazon stock, though most remain bullish.
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