Amazon challenges Nvidia: AWS slashes AI chip prices to undercut Nvidia’s H100 and lure customers away

Amazon Web Services (AWS) has slashed the prices of its Trainium AI chips in a direct challenge to Nvidia, The Information reported. By offering similar performance at just 25% of the cost of Nvidia’s H100 chips, AWS is making a bold play to lure customers away. The aggressive pricing strategy has sparked conversations about how this shift could impact Nvidia’s stronghold in the AI hardware market.

The news comes less than a month after Amazon revealed its first quantum computing chip Ocelot, marking a step forward in its push to develop large-scale quantum systems.

A Direct Hit at Nvidia’s Stronghold

For years, Nvidia has been the dominant force in AI computing, with its H100 chips powering machine learning models across research labs, enterprises, and AI startups. The company’s ecosystem is built on a combination of hardware and its widely adopted CUDA software, making it difficult for competitors to break through. But AWS is betting that cost savings will be enough to shake things up.

AWS has been pushing its own silicon to compete with Nvidia’s GPUs, and Trainium is central to that effort. The first-generation Trainium chips were already positioned as a cost-effective alternative, but with the latest price reductions, AWS is signaling that it’s ready to compete head-on.

Can AWS Convince Businesses to Switch?

Price alone isn’t enough to pull customers away from Nvidia. The real challenge lies in whether AWS can offer a seamless transition for developers who have built their AI workloads around Nvidia’s software ecosystem.

AWS claims its Trainium2 chips deliver up to four times the performance of the original Trainium while maintaining the cost advantage. If those claims hold up in real-world AI training and inference workloads, businesses looking to cut down on expensive cloud costs may start considering Trainium as a viable alternative.

AI Chip Price War Heats Up as Amazon Slashes Costs

This move isn’t just about competing with Nvidia—it’s part of a larger effort by Amazon to own more of the AI computing stack. By developing its own chips, AWS can provide customers with lower-cost options while reducing its own reliance on Nvidia.

The AI chip wars are heating up, and Amazon is making it clear that it won’t let Nvidia dominate without a fight. Whether AWS can truly disrupt Nvidia’s dominance remains to be seen, but one thing is certain—the battle for AI hardware supremacy just got more intense.