Wall Street rebounded from losses earlier in the week that were triggered by the Federal Reserve meeting, with the S&P 500 ending the week up about 1% [1]. Crude oil prices also declined following positive news about oil tankers exiting the Strait of Hormuz [1]. The AI chip sector was particularly active, driven by Apple CEO Tim Cook's comments that the company will raise prices due to increasing memory and storage chip costs, signaling persistent supply-demand imbalances [1]. This led to notable gains in stocks such as Sandisk, Western Digital, Applied Materials, Lam Research, and materials supplier Qnity Electronics, as demand for manufacturing equipment and materials remains strong [1].
A significant development was Amazon's reported talks to sell its custom chips—including Graviton, Trainium, and Nitro—to third-party data centers, as reported by Bloomberg News [1]. Amazon shares rose by a few dollars on the news, reflecting investor optimism about the company's chip monetization strategy [1]. Amazon CEO Andy Jassy previously estimated that if the chip business operated independently and sold chips to AWS and external customers, its annual revenue run rate would be $50 billion, a figure comparable to analyst estimates for Advanced Micro Devices this year [1].
The move positions Amazon to potentially compete with Nvidia, which currently dominates the AI chip market. However, Nvidia stock responded positively to the news, trading about 2% higher on Thursday [1]. Google's earlier monetization of its custom silicon, including a deal to supply Anthropic with one million TPUs, was cited as a precedent for Amazon's strategy [1].
Looking ahead, the market is anticipating earnings reports from FedEx, FedEx Freight, Micron, Carnival Corp, and Darden Restaurants next week. Key economic data releases include the S&P Global Manufacturing and Services PMI, the May PCE price index, weekly jobless claims, the final read on Q1 U.S. GDP, and the University of Michigan's consumer sentiment and inflation expectations for June [1].
CONCLUSION
Amazon's exploration of selling its custom AI chips to third-party data centers has been met with a positive market reaction, boosting its share price and signaling potential competition for established players like Nvidia. The broader market also recovered from earlier losses, with strong performance in the semiconductor sector and anticipation building for upcoming earnings and economic data releases.