Nvidia's Physical AI Expansion Drives Asian Partner Gains; Amazon Eyes $50B Chip Business
Nvidia's physical AI foray boosts Asian suppliers to 90% of production costs from 65%, triggering share rallies at LG Electronics (15%), Nanya Technology (10%), and profit jumps at Samsung (48x) and SK Hynix (5x). Amazon’s potential standalone Graviton and Trainium chip sales could drive chip revenue from $20B to $50B.
1. Nvidia's Physical AI Pivot
Nvidia has expanded beyond semiconductors into robotics, autonomous systems and AI-enabled manufacturing under its physical AI initiative, increasing integration across its production ecosystem.
2. Asian Supplier Rally
Asian partners now constitute about 90% of Nvidia’s production costs, up from 65% last year, driving share rallies at LG Electronics (15%) and Nanya Technology (10%) and profit jumps at Samsung (48x) and SK Hynix (fivefold).
3. Hyperscaler Investment Boost
Amazon, Microsoft and Alphabet are committing nearly $200 billion each to AI spending this year, with Nvidia accounting for nearly half of Microsoft’s capex and a quarter of Amazon’s, sustaining demand for its hardware.
4. Emerging Competition from Amazon
Amazon is considering a standalone chip business to sell Graviton and Trainium chips externally, which could lift its chip revenue from $20 billion to $50 billion and introduce a new competitive dynamic for Nvidia.