Amazon chip sales talks lift AI trade as Wall Street rebounds

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Amazon AI chip sales lift Wall Street

Highlights

Amazon shares rise as Bloomberg reports talks to sell Graviton, Trainium, and Nitro chips to third-party data centers, targeting a $50 billion annual revenue run rate.
AI chip sector gains after Apple CEO Tim Cook signals higher prices due to rising memory and storage chip costs, boosting names like Sandisk, Western Digital, Applied Materials, and Lam Research.
S&P 500 closes the week up about 1%, rebounding from Fed-related losses, as attention shifts to upcoming FedEx, Micron earnings and key U.S. economic data releases.

Amazon chip strategy and semiconductor gains

As reported by CNBC Investing Club, Amazon shares rise after Bloomberg News reports that the company is in talks to sell its custom chips to third-party data centers.

The move points to a broader monetization push for Amazon's chip family, including Graviton, Trainium and Nitro. In April, Chief Executive Andy Jassy says that if the chip business were a standalone company selling to AWS and other third parties, its annual revenue run rate would have been $50 billion.

The broader AI chip trade is also gaining support from Apple Chief Executive Tim Cook's comments that the company will raise prices as memory and storage chip costs keep climbing. That signals memory prices are not easing soon, supporting gains in companies such as Sandisk, Western Digital, Applied Materials and Lam Research, as stronger output requires more chipmaking equipment.

Market backdrop and coming catalysts

Wall Street closes the week higher, with the S&P 500 up about 1%, as equities recover most of Wednesday's losses tied to the Fed meeting. Crude prices also fall on encouraging headlines about oil tankers exiting the Strait of Hormuz.

Amazon's chip ambitions also add a competitive angle for Nvidia, although Nvidia shares still trade about 2% higher on Thursday. Google is already monetizing custom silicon, after announcing in October a deal to supply Anthropic with one million tensor processing units.

Investors now turn to next week's catalysts, including earnings from FedEx and FedEx Freight, as well as reports from Micron, Carnival Corp and Darden Restaurants. Key economic releases include S&P Global Manufacturing and Services PMI, the May PCE price index, weekly jobless claims, the final reading of first-quarter U.S. gross domestic product, and the University of Michigan's final June data on consumer sentiment and inflation expectations.

Our earlier analysis of Nvidia’s $25 billion bond sale explained how the record fundraise strengthened NVDA’s liquidity as competition from custom AI chip initiatives accelerates. We also noted mixed near-term technical momentum, with the stock consolidating between key support and resistance levels while traders watched for a breakout signal.

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