Motley Fool Backs Amazon Over Nvidia as $20 Billion Chip Run Rate Challenges 46 P/E
Updated
Updated · The Motley Fool · May 13
Motley Fool Backs Amazon Over Nvidia as $20 Billion Chip Run Rate Challenges 46 P/E
7 articles · Updated · The Motley Fool · May 13
Amazon was picked over Nvidia for new AI investment, with the call arguing Nvidia’s near-record share price already assumes years of dominance ahead of its May 20 earnings report.
Nvidia has guided for about $78 billion in fiscal first-quarter revenue—up roughly 75% year over year—but its biggest AI customers are increasingly building alternatives, raising the risk that pricing power weakens.
Broadcom’s custom-chip deals with Google through 2031, Anthropic from 2027, OpenAI and Meta underscore that shift away from sole reliance on Nvidia hardware.
Amazon’s case rests on a $20 billion annual chip revenue run rate growing at a triple-digit pace, plus AWS sales up 28% to $37.6 billion with a 37.7% operating margin.
At about 32 times earnings versus Nvidia’s 46, Amazon was framed as a cheaper, more diversified way to bet on AI chips despite heavy capital spending targeting roughly $200 billion in 2026.
Amazon's chips power its cloud and save billions. How can anyone compete with a company that is its own best customer?
As its biggest customers become its biggest rivals, is Nvidia's massive valuation built on borrowed time?