Nvidia Attacks AWS

By Douglas A. McIntyre Published Dec 19, 8:15AM EST

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Nvidia Corp. (NASDAQ: NVDA) has started renting servers for its AI storage operation.
It could eventually overtake AWS as the largest cloud company in the world.

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Nvidia Attacks AWS — © leminuit / Getty Images

AWS (formally known as Amazon Web Services) may have a new rival. This could be a huge problem because AWS is Amazon.com Inc.’s (NASDAQ: AMZN | AMZN Price Prediction) earnings engine, and most analysts believe it is also the primary reason Amazon’s stock has done so well. The new competition could be from Nvidia Corp. (NASDAQ: NVDA), which has started renting servers for its artificial intelligence (AI) storage operation. Nvidia also provides chips to AWS.

According to The Information, based on documents filed with the U.S. Securities and Exchange Commission, “And in a little-noticed disclosure, it told investors that in the long run it could generate $150 billion in revenue from software and cloud services—more than either Nvidia or AWS currently generates annually.” This means there is a chance that Nvidia could eventually be the largest cloud company in the world. AWS is in first place in this sector, and Microsoft Corp. (NASDAQ: MSFT) is second. Nvidia also counts Microsoft as one of its largest customers.

To show the potential scale of the Nvidia plan, AWS had revenue of $27.5 billion in the most recent quarter, up 20% from the same quarter the year before. Operating income rose 49% to $10.4 billion. This is against Amazon’s total revenue for the quarter of $158.9 billion, up 11% from the same quarter in 2023. Amazon’s total net income for the entire company was $15.3 billion, up 54%. What is most notable is the AWS operating income was 68% of Amazon’s total. Over time, Amazon’s earnings have become increasingly dependent on AWS.

Amazon’s stock has done well this year. It is up 45% against an S&P 500 increase of 24%. Nvidia’s shares are up 160%. Nvidia is not a large player in data center-based AI. If that changes, Amazon will have a major headache.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.