Amazon’s Cloud Is Rolling In Cash… Their Next Move is About to Thunderstorm All Over Nvidia’s Turf

By Stocks News   |   3 weeks ago   |   Stock Market News
Amazon’s Cloud Is Rolling In Cash… Their Next Move is About to Thunderstorm All Over Nvidia’s Turf

If you walked down Broadway in Nashville right now, mic in hand, and asked a drunk bachelor party where Amazon makes most of its money, the answers would probably sound something like: “Shipping crap in two days, duh.” “Deliverin’ my dog’s Halloween costume at 10PM.” “Prime Day, baby!” And you know what? They wouldn’t be wrong… but they wouldn’t be right either. Not even close.

Amazon’s Cloud

Yes, Amazon sells roughly 9 billion random items a year… half of which are probably phone chargers, collagen supplements, or baby wipes. But here’s the dirty little secret Jeff Bezos would love to whisper to you from orbit (sitting right next to Katy Perry): The real money isn’t in boxes. It’s in the cloud. More specifically, it’s in Amazon Web Services… aka AWS, aka “the part of Amazon that nobody really understands but prints hundred dollar bills like it’s the Federal Reserve during a global pandemic.” Last year, AWS brought in $108 billion in revenue. Sounds cute until you realize that only made up 17% of Amazon’s total revenue… but accounted for 58% of the company’s operating income.

So how does AWS actually make money? Simple: they lease the digital plumbing that powers half the internet. Need to stream Netflix? AWS charges Netflix for the server time. Running an app? AWS bills you for compute cycles. Storing 900 terabytes of HR onboarding videos? That’s gonna cost ya. Training a large language model to automate customer service and fire half your staff? AWS has the chips for that, too.

Amazon’s Cloud

AWS makes its money by charging businesses to use their infrastructure… compute power, storage, databases, analytics, AI chips, you name it. Instead of building their own server farms (which is expensive, complicated, and one lightning strike away from disaster), companies just rent time on Amazon’s massive network of data centers. And the beauty of it is that once a company is hooked into AWS, it’s almost impossible to leave. It’s like signing a gym membership that also handles your payroll, runs your website, powers your emails, and knows the names of your children. Rip it out, and your entire business might go belly up.

That’s how AWS turns a modest-looking 17% slice of Amazon’s revenue into over half of its total profits. It’s not sexy. It’s not two-day shipping. But it is a damn good business… one that quietly hums in the background, charging rent to the entire internet just to exist.

Amazon’s Cloud

AWS runs at a jaw-dropping 37% operating margin, which makes Amazon’s North American retail business look like it’s selling dollar slices at a loss… clocking in at just 6.4%. And here’s the kicker: Amazon’s not content with just being the landlord of the internet anymore. Now they’re coming for Nvidia’s neck. Their weapons of choice to do it are Graviton4 and Trainium2 which are custom chips designed by AWS to cut Nvidia off at the legs. And it’s working. Nvidia’s top-of-the-line H100 chips can run over $30,000 a pop, but AWS is offering companies similar performance at a much better bang for your buck with its own silicon.

Just ask Poolside, the $3 billion AI startup. They bailed on Nvidia in favor of AWS’s Trainium2 chips, calling the cost-benefit “incredible.” And here’s the ironic part… Nvidia actually invested in them. That’s like Andy selling Dwight his Xterra for way too cheap… only to watch Dwight flip it for a fat profit the next day.

Amazon’s Cloud

Oh, and Amazon’s new Trainium3 chip is reportedly going to double performance, cut energy use by 50%, and, if I had to guess, probably moonlight as a Tesla-killer too. They’ve even built a half-million-chip AI supercomputer called Project Rainier to help Anthropic train models like Claude 4. I didn’t stutter… AWS now powers actual AI brains. Meanwhile, your Alexa can’t figure out how to turn off the lights without asking twice (speaking from personal experience).

Bezos has made it clear… Amazon is done trying to catch Nvidia. They’re trying to own the full AI stack… from networking to chips to cloud compute to training. It’s not about beating Nvidia in raw speed (yet). It’s about beating them in cost-efficiency and control.

Amazon’s Cloud

AWS doesn’t want to pay the “Nvidia Tax” forever. And if they pull this off, the next time you see a guy with an Amazon logo on his polo shirt, just know he probably works on something way more profitable than shipping your dog food. He might just be building the brain of the future.

At the time of publishing this article, Stocks.News holds positions in Amazon, Netflix, and Tesla as mentioned in the article.

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