Citron Sees Amazon’s Trillion-Dollar AI Chip Potential Challenging Nvidia’s Dominance

• Amazon CEO Andy Jassy had said that AWS has scaled its AI-focused revenue to a $15 billion run rate in just a few years.
• Citron stated that Amazon’s custom chips create a high-growth business line within its broader operations, in contrast to Walmart.
• The firm added that current valuations do not yet reflect Amazon’s AI opportunity.

Citron Research on Thursday highlighted Amazon.com Inc.’s (AMZN) artificial intelligence stronghold, calling it the most serious challenge to Nvidia Corp.'s (NVDA) semiconductor leadership.

The firm’s assessment came after Amazon’s CEO, Andy Jassy, outlined a sweeping vision for AI, describing it as a pivotal innovation that will reshape nearly every customer interaction.

AWS And Custom Chips Driving Economics

Jassy said that within just a few years of the current AI wave, AWS has scaled its AI-related revenue to a run rate exceeding $15 billion, far surpassing its early cloud growth benchmarks. 

He added that the company’s chips segment, including Graviton, Trainium, and Nitro, exceeded a $20 billion annual revenue run rate and is expanding at triple-digit year-over-year rates.

“At scale, we expect Trainium will save us tens of billions of capex dollars per year, and provide several hundred basis points of operating margin advantage versus relying on others’ chips for inference.”

-Andy Jassy, CEO, Amazon

Amazon stock traded over 3% higher by Thursday mid-morning. On Stocktwits, retail sentiment around the stock flipped to ‘bullish’ from ‘neutral’ territory the previous day. Message volume changed to ‘high’ from ‘normal’ levels in 24 hours. 

Citron’s Bold Call On Amazon

In a post on the X platform, Citron said Amazon’s AI chips present a “trillion-dollar company” potential hidden within its broader operations, drawing a stark contrast to traditional retail competitors.

For several years, investors favored Walmart Inc. (WMT) for its steady growth while penalizing Amazon for aggressive capital expenditures. Citron suggested that perception is changing rapidly. 

The firm explained that Amazon’s spending has now translated into tangible, high-growth business lines, in contrast to Walmart’s slower expansion profile despite its premium valuation multiple. Citron also noted that Amazon’s current valuation does not reflect the scale of its AI opportunity.

Central to Citron’s thesis is Amazon’s growing presence in AI-driven semiconductor infrastructure. The firm highlighted the business segment generating an estimated $50 billion annual revenue run rate, with demand outpacing supply. 

According to Jessy, advanced chips tied to Amazon’s AI ecosystem are sold out, and future capacity is already attracting strong customer interest. Citron characterizes this as a strong challenge to Nvidia, long viewed as the dominant force in AI chips.

AMZN stock has gained over 17% in the last 12 months. 

Also See: EOSE Stock Jumped 18% Today – Investors Cheer Explosive Revenue Guidance, Record Shipments And Expanding Battery Production

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