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

Cloud data storage giant Snowflake has signed a new five-year deal worth $6 billion with Amazon Web Services companies announced on Wednesday.

Snowflake has always run on AWS, but nowadays it is of course also available on Microsoft Azure and Google Cloud. By comparison, Snowflake has sold a total of $7 billion worth of services through the AWS Marketplace since its founding in 2012, AWS says. So this new contract is close to all the money it has ever made from that cloud.

That’s possible because Snowflake’s customers have recently been increasing their spending on AWS, Snowflake says, doubling to $2 billion by 2025 for that calendar year alone.

What’s driving the growth is, of course, AI. Snowflake has been offering its AI building tool, Cortex AI, for a few years. It’s a useful tool: Snowflake is where much of an enterprise’s data lives. The AI ​​tool can provide features such as a text interface for database queries (just ask, in plain language), summary reports, and so on.

Of particular note, Snowflake signs this contract for greater access to AWS’s own ARM-based CPU chip, Graviton.

As AI moves from training to everyday use to agent-driven automation, CPU usage is skyrocketing. While GPUs handle training and reasoning, CPUs handle the bulk of the other tasks related to AI, especially agents.

Amazon CEO Andy Jassy boasted last month that Amazon’s own AI chips offer “better value” than Nvidia’s offerings, although AWS still uses Nvidia’s chips in its cloud. The demand for AI processing is so high that cloud providers like AWS are deploying chips as quickly as possible. Furthermore, all the major AI modelers (and many other AI offerings) have their apps designed specifically for Nvidia’s chips.

Still, Amazon’s own chips are a more affordable option for the cloud giant to deploy. Amazon, ever the price-conscious company, says it is passing these savings on to its customers.

Consequently, these chips are attracting new multi-billion dollar deals. Last month, for example, AWS signed a deal to supply millions of Graviton chips to Meta for its growing AI computing needs. That was a big win for AWS because Meta had signed a $10 billion deal with Google Cloud a few months earlier.

More than that, these deals serve as notice to Nvidia that competing CPUs from the cloud giants are trying to come to lunch. Google has also been making its own AI chips for years. Microsoft just launched it Maia AI chip in January.

Not surprisingly, Nvidia CEO Jensen Huang said last week that he is more than ready to defend and even grow his turf. The new AI-specific CPU his company launched, called Vera, represents a “brand new” $200 billion market for Nvidia, he proclaimed after posting another record quarter last week. And he has already sold $20 billion, he said.

While Nvidia may not easily give up market share to Amazon or any cloud provider, AWS’s multi-billion dollar cloud deals show how AI is lifting its boat. Whichever companies benefit most from the rise of AI in our work and private lives, cloud providers will get their share.