Walmart is investing in NVIDIA chips to circumvent the Amazon’s cloud

Walmart is investing in NVIDIA chips, which are high-level graphical processing units (GPUs). They will use Nvidia Corp.’s chips in its cloud-based data centres as the retail behemoth pivots away from competitor’s computing services, Retail Dive reports.

The company is reportedly looking to build its data centres to be about a tenth of the size of Amazon’s, and is now licensing out its services to other companies, making its intentions to act as an alternative to Amazon Web Services (AWS) clear.

Retailers have been moving away from AWS, and Walmart may push that trend further. Amazon’s seemingly never-ending expansion into retail has caused many retailers to view the e-commerce titan as the ultimate competitor, and they are becoming more reluctant to share their data with the company.

Walmart has previously asked its vendors to stop using AWS, and Target is also reportedly moving away from Amazon’s cloud. Walmart may now be looking to get its vendors on its cloud instead.

AWS is a factor in Amazon’s e-commerce success, and Walmart could be looking to replicate it. Amazon’s retail business likely benefits from AWS because it makes processes more cost efficient by aggregating data in one place, allowing the company to make effective adjustments in all areas of its business.

Amazon can then pass those cost efficiencies on to merchants via cheap back-end IT services, boosting its value prop. Walmart may try to gain similar benefits from its own cloud services to help even the playing field with its chief rival.

Investing in NVIDIA’s chips is an overall investment in artificial intelligence (AI) by Walmart. AI is incredibly important for retailers to thrive going forward, and NVIDIA’s GPUs are built to process large amounts of data quickly. Beyond cloud services, their processing power makes them useful for AI applications like natural language processing, image recognition, and overall machine learning.

This cloud push is another example of Walmart trying to compete more directly with Amazon. Walmart has been trying to build itself up to compete with Amazon’s e-commerce dominance by acquiring a number of e-commerce sites and investing in innovation. AWS is a huge part of Amazon’s business, both for retail and overall, so while Walmart has seen improved e-commerce growth, the retailer may want to become an alternative to Amazon in all ways in order to truly compete.

Deep neural networks are used in artificial intelligence processing to allow computers to understand the relationships between pieces of information without having to be specifically programmed to understand that the information is related. Deep neural networks, and the broader deep learning segment, are part of a growing artificial intelligence market.

Chowdhry thinks the ramp-up of Walmart’s cloud will happen over the next six months and will be “incrementally positive” to NVIDIA’s GPU business. He claims the Wal-Mart cloud, running on NVIDIA’s GPUs, will be one-tenth the size of AWS. If it pans out, this would be a significant move for the retail giant and could bring more GPU sales for NVIDIA.

Neither NVIDIA nor Wal-Mart has confirmed any of this yet, but if Walmart is looking to bring more deep learning to its cloud business, it would make a lot of sense for it to use NVIDIA’s processors. Santa Clara-based Nvidia sells high-end chips popular with gamers. Over the past year, its chips have also found their way into artificial intelligence and machine learning applications, including self-driving cars, an area where it’s landed key partnerships with automakers like Audi and Toyota Motor Corp.

Nvidia’s stock is up more than 268 percent over the past 12 months, making it one of the Bay Area’s best-performing stocks. They already powers some of Amazon, Google, and Facebook’s deep-learning cloud businesses, and the company expects deep learning to become an even bigger part of its GPU sales in the coming years.

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