Amazon Shares Hit Record High Following Strategic Partnership with Meta for Graviton Chip Supply

Amazon and Meta Team Up on AI Processing Power

Amazon Inc shares saw a significant surge in buying interest on Tuesday, 24 April, rising 3.2% to a record high of $263.13 after news that it will supply its Graviton processors to Meta Platforms, the parent of Facebook. Meta shares also gained, climbing 3.3% to $680 apiece.

The partnership between Amazon and Meta was announced on Friday, with Amazon agreeing to provide Meta with tens of millions of Graviton cores to support the social media giant's agentic AI workloads. Graviton is Amazon's family of central processing units (CPUs) designed for cloud computing. According to the company, Meta will use "tens of millions" of Amazon Web Services' Graviton CPUs to power its AI offerings, although financial details of the deal were not disclosed.

This deal highlights the growing demand for processing power in the tech industry, particularly in the field of artificial intelligence. Meta will be operating 32 data centres to handle the load, with a new data centre set to be completed in Oklahoma. The company's applications are used by around 3.6 billion people every day, further emphasizing the need for a robust infrastructure.

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The Meta-Amazon partnership is the latest Big Tech tie-up as companies race to secure sufficient processing power for next-generation AI models. The deal makes Meta one of the largest users of Graviton processors globally and is expected to run for at least three years.

Meta has previously signed major chip deals with Nvidia and Advanced Micro Devices and has also worked closely with Arm Holdings on its CPU architecture. The company is also investing heavily in developing its own silicon to reduce costs and lower dependence on third-party chipmakers, according to Bloomberg.

For Amazon, the recent deal, along with other recent partnerships, has boosted the outlook for Amazon Web Services ahead of the company's earnings report scheduled for 29 April. Earlier this week, Anthropic said it plans to spend over $100 billion over the next decade on Amazon's cloud infrastructure, covering multiple generations of Trainium chips and tens of millions of Graviton cores.

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Amazon has guided for significantly higher capital expenditure this year, joining peers in ramping up investments in data centres and infrastructure to meet rising AI demand. The company plans to spend up to $200 billion on data centres, chips, and related equipment.

While Amazon continues to face challenges in gaining traction for its own AI models, such as Nova, it remains a key player in the AI ecosystem by providing critical infrastructure through its cloud computing platform. Amazon shares have staged a strong comeback in April, gaining 26% so far amid improving sentiment towards technology stocks.

For the December quarter, Amazon reported revenue of $213.4 billion, up 14% year-on-year. Net income stood at $21.19 billion, or $1.95 per share, compared with $20 billion, or $1.86 per share, a year earlier.