Nvidia Expands AI Partnership With Amazon Web Services

Nvidia (NVDA) recently got another massive vote of confidence from one of the world's biggest cloud companies. Last week, Amazon Web Services, the cloud computing unit of Amazon (AMZN), announced it will deploy two million additional Nvidia GPUs across its global network over the next two years.

The move builds on a partnership that already spans 16 years. For investors watching NVDA stock, it signals that demand for AI chips continues to climb, driven by higher capital expenditures.

Why Nvidia's Stock Keeps Climbing on AI Demand

Valued at a market cap of $5 trillion, Nvidia is the largest company in the world. In fiscal Q2 of 2027 (ended in July), it reported revenue of $96 billion, up more than 100% year-over-year (YoY). 

Data center revenue, which includes AI chips sold to companies like AWS, rose 18% from the prior quarter to $89 billion. Chief Financial Officer Colette Kress told investors that the cloud industry backlog now tops $2 trillion, and the top five hyperscalers are expected to spend close to $800 billion on AI infrastructure this year. 

CEO Jensen Huang explained AI agents use far more computing power than a person typing a question into a chatbot.

“The amount of compute necessary for an agent versus a human using it is probably 15 to 100 times depending on the type of problem you're trying to solve,” Huang told analysts on the earnings call.

It's clear why AWS has committed to significantly increasing chip spending, even as memory costs squeeze margins across the chip industry.

What the Expanded AWS Deal Covers

The two tech giants plan to bring Nvidia's new Vera CPUs to AWS infrastructure, giving customers another option for AI workloads that need heavy CPU power alongside GPUs. 

The companies are also extending Nvidia's NVLink Fusion technology, which connects custom chips to Nvidia's network, with a new high-bandwidth memory design built alongside Amazon's chip unit, Annapurna Labs.

Perhaps the most notable piece involves the federal government. AWS and Nvidia plan to build AI factories for the U.S. government, including 100,000 GPUs running on secure AWS infrastructure for national security work. 

The system will support workloads classified at some of the highest security levels used by federal agencies. Nvidia's open-source Nemotron models will remain available on Amazon Bedrock and SageMaker, giving businesses additional options when building AI applications. 

And Amazon's robotics division is adopting Nvidia's Jetson, Omniverse, and Isaac platforms to accelerate development of warehouse robots.

AWS CEO Matt Garman framed the deal as a response to customer demand. “Customers want the freedom to choose the best tools for their AI workloads, and they want confidence that everything works seamlessly together,” Garman said in a company statement.

What's Next for NVDA Stock?

For chip stocks broadly, the AWS expansion signals that AI infrastructure spending shows no sign of slowing. Nvidia told investors it expects fiscal 2028 revenue to grow roughly 70% from the current year, and executives called that outlook supply-constrained rather than demand-constrained.

Huang said demand growth is closer to 100%, but Nvidia can't build chips fast enough to fill every order. “We have supply for 70%. We have more supply than 70%, but about 70%,” Huang said. “Our demand is much higher than that.”

Rising memory costs remain a challenge worth watching. Nvidia said gross margins will dip to between 71% and 72% in the fourth quarter before recovering to the 72% to 73% range next year, as memory prices climb across the industry. Still, the AWS announcement adds another data point for anyone tracking the Nvidia stock price heading into the fall. 

Combined with recent deals involving OpenAI, MediaTek, and a group of infrastructure investors that includes BlackRock (BLK) and Goldman Sachs (GS), Nvidia is locking in demand across nearly every corner of the cloud computing world.

Whether that translates into sustained stock gains will depend on execution. Nvidia's next earnings call, covering the third quarter of fiscal 2027, is scheduled for Nov. 17, giving investors their next major checkpoint on how the AWS partnership and broader AI buildout are playing out.

Out of the 49 analysts covering NVDA stock, 44 recommend “Strong Buy,” three recommend “Moderate Buy,” one recommends “Hold,” and one recommends “Strong Sell.” The average NVDA price target is $324.44, above the current price of $218.