Amazon stock sinks after offering discounted access to Trainium AI servers

Amazon stock gives up more ground on Tuesday after Trainium2 news.
Amazon Web Services has given access to a longtime customer to train AI models using its in-house chip.
AWS' discount costs customers about a quarter of what its costs to use Nvidia's H100 chipsets.
The Dow Jones sank 0.6% by Tuesday afternoon.

Clay Webster FXStreet

Amazon (AMZN) stock sold off 1.8% by Tuesday afternoon after news emerged that it was discounting the price of access to cloud server infrastructure powered by its artificial intelligence-focused Trainium chips.

AMZN stock traded back near $190 during the afternoon session as major indices shed weight ahead of the Federal Reserve’s (Fed) interest rate decision on Wednesday. The Dow Jones Industrial Average (DJIA), of which Amazon is a member, descended 0.6% at the time of writing, while the NASDAQ lost a more dear 1.6%.

Amazon stock news

The Information reported on Tuesday that Amazon Web Services (AWS) has discounted its pricing for access to the AI servers that use its in-house Trainium chips. The Trainium2 chip was released last autumn, and Amazon claims it contains 96 GB of high-bandwidth memory.

The Trainium2 is designed specifically for training AI foundation models and large language models, and engineers at its in-house Annapurna Labs say that servers connecting 100,000 of the chips can produce up to 65 ExaFLOPS of low-precision compute performance.

AWS has plans to open up the program to further customers but currently is only providing access to one of its long-time customers. The contract gives the unnamed client a similar performance to Nvidia’s H100 AI chipsets but at just a quarter of the cost.

It is no simple task to switch from iterating with Nvidia chips to Amazon’s Trainium2 however. Nvidia chips use the CUDA programming language, so switching to a new system requires major alterations.

Amazon stock forecast

Like many of the Magnificent Seven stocks right now, the Q1 sell-off has left Amazon stock trending below both its 100-day and 200-day Simple Moving Averages (SMA). This makes it more likely that the downtrend will continue. The last time AMZN traded below the 200-day SMA, that period lasted about one month — from early August 2024 through early September 2024.

However, during that pullback last year, the bottom came on the second trading session below the 200-day SMA. This time the downtrend is transpiring at a steadier rate, and AMZN stock put in a new year-to-date low on Tuesday at $189.38.

Expect Amazon to find some stabilization once it reaches last year's April 25 low near $166 or the August 5 flash crash low near $152.

AMZN daily stock chart

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Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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