Amazon, Databricks sign deal for AI chips: report

Amazon (NASDAQ:AMZN) has signed a deal with Snowflake (SNOW) competitor Databricks to allow the data warehouse company to use Amazon’s Trainium AI chips, The Wall Street Journal reported.

Amazon shares rose fractionally in premarket trading on Tuesday.

The five-year deal, of which terms were not disclosed, could see companies pay less to create their own artificial intelligence capabilities, the news outlet added, citing comments from Amazon.

Databricks executive Naveen Rao told The Journal that its partnership with Amazon will allow AI to become faster and cheaper for businesses, as it allows Databricks to pass on the savings it gets from using Amazon’s AI chips as opposed to those from Nvidia (NVDA), which dominate the AI accelerator market.

In addition to using Amazon’s AI chips, the deal expands the usage of Nvidia’s own chips by Databricks, which rents them from Amazon Web Services as part of a pre-existing deal.

Amazon unveiled the second version of its Trainium chips in November 2023. The company also has a line of AI chips known as Inferentia, which are also used for building and utilizing AI models.