Key Points:

• To lower reliance on NVIDIA (NASDAQ: NVDA) Amazon (NASDAQ: AMZN) intends to create its own AI chips
• The huge R&D expenses for limited use raise questions on whether Amazon’s chips will be sold to others or used just for internal needs.
• Nvidia has been the stock to own the last decade, but The Next Nvidia stocks could be even better. Click here to see the three stocks smart money is buying hand over first.

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Transcript:

[00:00:00] Doug: Our friends at amazon have decided that they’re going to build their own ai chips Which I think is it’s a bold move I think it’s going to be very hard but Bloomberg ran a story that said that amazon does not want to be nvidia dependent. I’m sure that Microsoft doesn’t want to be an alphabet.

[00:00:20] Doug: Doesn’t, but Amazon is going to do something about it. And that is, they are going to literally build their own AI chip from the ground up to the speculation is, since they invented the cloud, I guess, well, maybe you can invent the thing that now powers the cloud, but, I don’t quite see the logic to that.

[00:00:40] Doug: Here’s my problem with this. AMD, which is a chip company that really knows what it’s doing.

[00:00:47] Lee: And they’re coming on, they’re coming on in the AI world.

[00:00:51] Doug: Their stock is down this year. Yeah, it is. NVIDIA’s up 185% if you’re the number two person in a market.

[00:01:00] Doug: And your stock is down when the other guy is up that much. It tells me that Amazon is trying to sort of become the third place player in a market where even second place is crummy. So I’m not going to say that I have a conclusion about this. I just saying I’m very anxious that Amazon put a huge amount of money into this.

[00:01:22] Doug: And that it doesn’t work. I also worry that if let’s say that they do this and the chips are fine, they’re great. Are they then going to sell these chips to other people? Are they going to be chips that Amazon uses by itself? If they do it by themselves, you’re putting a lot of money into R and D to basically sort of keep it inside your own moat.

[00:01:44] Doug: So I don’t like it. How’s that? I don’t like the move.

[00:01:48] Lee: Well, Amazon has been on such an incredible role, over the last 20 years. And I, I saw an interesting tidbit where it was, the guy that, and this was like 20 years ago, in 2003 or something like that, where Bezos went to lunch with the guy that was the CEO of Costco (NASDAQ: COST).

[00:02:08] Lee: He said, lower your prices. Oh, unique. I mean, make everything a deal. And maybe what they’re thinking is. If we can get in and do a design quick enough, and the thing is the timing on this, because God, that takes, it can take months and years to, to develop it all. I mean, obviously it will be outsourced to Taiwan Semi or somebody like that to build it, I guess.

[00:02:34] Lee: But yeah, I mean, I don’t know about this. I think I’d rather be in, AMD shoes because one of their chips is really starting to come on in the AI world. So. I don’t know. Yeah, it’s a gamble for sure.

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