amazon's gpu strategy: roi focus impacts nvidia's cloud dominance

2025-04-23 nvidia

Seattle, Wednesday, 23 April 2025.
amazon’s retail arm strategically tackled last year’s gpu shortages by implementing ‘project greenland’. this initiative prioritized return on investment for gpu allocation. amazon now mandates internal gpu requests to demonstrate roi, a move that streamlined resource management. this shift allowed amazon to secure ample gpu capacity. it potentially lessened reliance on nvidia, influencing the competitive landscape of cloud-based ai processing and impacting nvidia’s revenue from large cloud providers. amazon’s retail unit is projected to spend $5.7 billion on aws cloud infrastructure this year.

project greenland’s impact on gpu access

Amazon’s ‘Project Greenland,’ initiated in July 2024, centralized GPU capacity management [1]. It aimed to maximize GPU utilization across teams [1]. This project was crucial because, in 2024, Amazon’s retail unit faced a shortage of over 1,000 P5 instances, each containing eight Nvidia H100 GPUs [1]. By April 2025, an Amazon spokesperson stated that previous GPU shortage estimates were outdated, highlighting the success of ‘Project Greenland’ [1]. Amazon employees are now mandated to use ‘Greenland’ for all future GPU capacity requests [1].

roi-driven gpu allocation

Amazon’s current guidelines stipulate that GPUs are too valuable to allocate on a first-come, first-served basis [1]. Distribution should instead prioritize return on investment, aligning with the company’s long-term free cash flow growth [1]. This approach contrasts with earlier challenges where Amazon retail employees experienced months-long delays in securing GPUs [4]. By late 2024, internal documents indicated a plan to distribute GPUs to the highest priority initiatives as supply improved in early 2025 [1].

amazon’s ai investment and aws infrastructure

Amazon’s retail arm invested approximately $1 billion in GPU-powered AI projects as of early 2025 [1]. The retail division’s projected spending on AWS cloud infrastructure will increase to $5.7 billion in 2025, up from $4.5 billion in 2024 [1]. This reflects a 26.667 percent increase [1]. Amazon is also developing its own AI chip, called Trainium, which is expected to meet the retail division’s GPU needs [6]. Amazon CEO Andy Jassy has emphasized the need for companies to invest heavily in AI [3].

analyst perspective on amazon’s ai strategy

Analysts have a ‘strong buy’ consensus rating on amazon (amzn) stock [5][6]. This is based on 45 ‘buy’ and one ‘hold’ ratings assigned in the past three months [6]. The average amzn price target is $250.45 per share, implying 45.6% upside potential [6]. Amazon’s proactive management of gpu resources and strategic investments in ai are viewed positively by wall street [5][6]. Amazon is developing over 1,000 generative ai applications [3].

nvidia’s market position and competitive dynamics

Amazon’s shift towards roi-driven gpu allocation and internal ai chip development could influence nvidia’s market position [1]. While amazon remains a significant customer, internal optimization and alternative solutions may reduce its direct reliance on nvidia gpus [1]. Amazon’s ceo, andy jassy, noted that amazon’s trainium2 chips offer 30%-40% better price performance than currently available gpu-driven computing instances [3]. This trend suggests a potential shift in demand dynamics within the cloud computing sector [3].

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