In Amazon’s Austin chip lab, engineers are testing a new server design equipped with the company's latest AI chips, which aim to challenge Nvidia's market dominance. Amazon is developing these processors to reduce reliance on Nvidia’s expensive chips, referred to as the "Nvidia tax," used in its AWS cloud business.

Amazon’s AI chips, including Trainium and Inferentia, are newer than its long-established Graviton chips, which have been in development for nearly a decade. David Brown, AWS’s VP of Compute and Networking, claimed the new chips could be up to 50% cheaper than Nvidia’s.

AWS, contributing nearly 20% of Amazon’s revenue, saw a 17% sales increase to $25 billion in the January-March quarter. During Prime Day, Amazon deployed 250,000 Graviton and 80,000 AI chips to manage the surge in activity.