Is Amazon Starting an Nvidia-Style Run?

Nvidia (NASDAQ: NVDA) has rocketed higher since the earlier days of the artificial intelligence (AI) boom, surging a mind-boggling 1,500% over the past five years. This is for a very logical reason. The company has built an AI chip empire, offering the most powerful compute to drive the development and use of AI. And this has translated into record-level earnings quarter after quarter.

Nvidia continues to gain, rising about 25% so far this year. But it's not the only company on track to win in the current and upcoming stages of the AI boom. Another tech company -- one that's also leading in the AI space -- has seen its shares gather momentum in recent months, too.

I'm talking about Amazon (NASDAQ: AMZN), which has climbed more than 30% since the end of March. Is Amazon starting an Nvidia-style run? Let's find out.

Image source: Getty Images.

Amazon's AI story

So, first, let's talk about how Amazon fits into the AI story. Most of us know Amazon as an e-commerce giant, and this business is benefiting from AI in a big way -- the technology, used in various ways across the company's fulfillment network, for example, helps it gain efficiency. And AI is also helping Amazon better serve customers through AI-powered virtual shopping assistants.

But where Amazon truly is leading in AI is through its Amazon Web Services (AWS) business. AWS is the world's biggest cloud service provider, and AI has supercharged growth in recent quarters. Customers have been rushing to AWS for AI and non-AI services, prompting the company to announce $200 billion in capital spending for 2026 -- in order to keep up with this demand. Amazon said that much of this capital spending will turn into revenue in 2027 through 2028 -- so this investment is actually linked to customer commitments that already exist.

So, what exactly does AWS offer its AI customers? A variety of products and services, from chips and systems to a fully managed platform called Amazon Bedrock that allows companies to build AI applications and agents to suit their needs.

The chips business is particularly interesting as Amazon has seen explosive demand in recent quarters. Amazon offers the chips of market giants such as Nvidia, but it also sells its own in-house-developed chips, such as the Graviton central processing unit and Trainium, an AI chip. Here, let's zoom in on these in-house offerings. Nvidia says that these chips are delivering a $20 billion annual revenue run rate -- and this would be even higher if the company actually offered these chips to others beyond AWS, as do chip companies like Nvidia.

A stand-alone chips business

Amazon suggested the possibility of launching a stand-alone chips business in the future to do just that. But right now, what may be holding the company back is this: Demand is so high that Amazon must ensure it has enough chips for its AWS customers before thinking about serving others.

This strong demand for Amazon's chips and related products and services is resulting in revenue growth -- and excitement about the stock. As mentioned, the stock has jumped in recent times, and now I think Amazon may be heading for an Nvidia-style run. For three reasons.

First, Amazon, without dethroning Nvidia, could score a major win in the chip market with its own products. A stand-alone chips business may be another potential growth driver, and investors might be anticipating this right now. Three years into the AI boom, AWS' AI business has reached a revenue run rate of more than $15 billion -- that's about 260 times bigger than AWS' run rate three years after its commercial launch.

And like Nvidia, Amazon is an established tech giant that could get a fresh boost from its chip expertise. (Nvidia has been around for more than 30 years, and for most of its history, the company built its strengths by offering chips to the video games market.)

Second, Amazon's gains haven't been as great as those of Nvidia and certain other AI players in recent years. So, as investors look for new AI stocks to rotate into, Amazon could benefit.

NVDA data by YCharts

Finally, trading at 30x forward earnings estimates, Amazon is reasonably priced considering its track record of growth and what may lie ahead.

Investors may be taking notice of these elements -- and this could push Amazon to an Nvidia-style run.

Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.