In more good news for Amazon, Snowflake signs $6B deal with AWS for AI CPU chips

Snowflake, a leading player in cloud data storage, has announced a significant five-year agreement worth $6 billion with Amazon Web Services (AWS). This partnership, revealed on Wednesday, underscores Snowflake's long-standing relationship with AWS, although its services are also accessible through Microsoft Azure and Google Cloud. This deal is particularly noteworthy when considering that Snowflake has historically generated $7 billion in total sales via the AWS Marketplace since its inception in 2012. The new contract represents a substantial portion of Snowflake's cumulative revenue, as its clients are ramping up their spending on AWS, which is projected to reach an impressive $2 billion by 2025. The driving force behind this surge is the growing demand for artificial intelligence (AI). For the past couple of years, Snowflake has been offering its Cortex AI tool, designed to facilitate data queries and generate summary reports through a user-friendly text interface. Furthermore, this new agreement highlights Snowflake's commitment to leveraging AWS's proprietary ARM-based Graviton CPU chips as AI transitions from training phases to everyday applications and automation. Amazon's CEO, Andy Jassy, recently emphasized that these homegrown AI chips provide superior price-performance compared to offerings from Nvidia, even as AWS continues to use Nvidia's chips. The high demand for AI processing power has prompted cloud providers like AWS to rapidly deploy their chips. In a recent development, AWS secured a deal to supply millions of Graviton chips to Meta, enhancing its AI computing capabilities. This is a strategic win for AWS, particularly after Meta had previously entered into a $10 billion agreement with Google Cloud. These moves signal to Nvidia that major cloud providers are increasingly developing competitive CPU options. Google has been crafting its own AI chips for several years, while Microsoft launched its Maia AI chip earlier this year. Nvidia's CEO, Jensen Huang, acknowledged the competitive landscape, stating his company is prepared to defend its market share as they introduce a new AI-specific CPU, Vera, which he claims opens up a potential $200 billion market. As the landscape of AI continues to evolve, it's clear that cloud providers are poised to benefit significantly, showcasing the transformative impact of AI on both business operations and consumer lives.