Amazon's New In-House AWS Inferentia Chip Could Boost Cloud Business: Analyst

Amazon, Inc. (NASDAQ: AMZN) can increase its dominance in cloud with its in-house AWS Inferentia chip, according to Taiwan-based TFI Securities analyst Ming-Chi Kuo.

What Happened: AWS Inferentia is Amazon’s first custom silicon designed to accelerate deep learning workloads. It would provide high-performance inference in the cloud, bringing down the total cost of inference and making it easy for developers to integrate machine learning into business applications.

The AWS Inferentia chip, with Alchip as ASIC design service provider, will likely go into mass production in the fourth quarter of 2022, Kuo said.

Given that it adopts a 7-nm advanced node versus the existing 16-nm node, the analyst sees a marked improvement in performance and latency.

Read to learn how FAANG stocks performed in the first half of 2022.

While noting that AWS was a critical driver for Amazon even during the recession, the analyst said he expects the AWS Inferentia to strengthen the competitiveness and growth momentum of the e-commerce giant’s cloud business even further.

Why It’s Important: Amazon’s recent June quarter results show that AWS provided Amazon with $19.7 billion or roughly 16% of the total revenue. The segnment contributed $4.2 billion to the total operating profit of $7.7 billion.

Data from market research Canalys showed that Amazon was the leader in the worldwide cloud market, with a 31% share of the overall market. Microsoft Corporation (NASDAQ: MSFT) stood second with a 24% share.

AMZN Price Action: Amazon shares were trading 0.36% higher at $143.69, according to Benzinga Pro data.

Photo via Shutterstock.