Marvell Technology (NASDAQ:MRVL) rallied sharply on Thursday, closing up 7.27% at $310.58 after media reports indicated that Amazon is engaged in talks to sell its internally developed Trainium AI chips to third-party buyers for deployment in external data centers. Market participants viewed the discussions as a potential expansion of the custom silicon market - a segment in which Marvell serves as a principal infrastructure partner.
Marvell is the lead design and manufacturing partner for AWS's Trainium line, positioning the company to capture revenue if Amazon proceeds with external sales of the processors. Trading activity in Marvell stock spiked, with volume reaching about 188 million shares, compared with a roughly three-month daily average near 36 million shares - more than a fivefold increase.
The reports represent a meaningful departure from AWS's previous approach, which largely kept its homegrown chips for internal cloud usage. Amazon's AI chief Peter DeSantis told the reporting outlet that the company is in active discussions with potential buyers, though he did not identify any organizations involved in those conversations.
An AWS spokesperson, Doron Aronson, confirmed the company is exploring the direction. Aronson said: "While we've historically declined requests to sell chips directly, Andy noted it's quite possible we'll sell racks of them to third parties in the future." That comment echoes language in a recent shareholder letter from CEO Andy Jassy, who wrote that if Amazon's chips business operated as a standalone entity and sold chips produced this year to AWS and external customers, the annual run rate would be about $50 billion. Jassy added that strong demand makes it plausible the company would sell racks to third parties.
Investors zeroed in on the $50 billion run-rate estimate, interpreting it as evidence that Amazon views its chip program as a potentially large-scale business rather than solely a tool for reducing its own operational costs. That perception helped drive the rally in Marvell shares on Thursday.
Marvell has recently accumulated additional market momentum beyond the Trainium connection. The company was added to the S&P 500 and received a $2 billion investment from Nvidia, factors market participants cited as compounding positive AI-related tailwinds ahead of the back half of the year.
Amazon (NASDAQ:AMZN) also advanced on the news, finishing the session up 2.89% at $244.37 as investors reassessed the revenue opportunity tied to a chip unit that has largely remained behind the scenes. Nvidia (NASDAQ:NVDA) closed higher as well, rising 2.86% to $210.51, which market observers interpreted as a sign that the potential opening of Amazon's chips market is viewed as expanding overall AI infrastructure demand rather than directly undercutting incumbents.
Looking ahead, investors will seek clarity on how Marvell's custom-chip business might evolve when the company reports second-quarter results in August. Management commentary about specific design wins or supply arrangements related to Amazon's Trainium platform is expected to be a focal point for the earnings call, offering the market a more detailed read on revenue trajectory tied to those products.
Context for markets and sectors
- Semiconductor and semiconductor-equipment sectors - Marvell's role as lead design and manufacturing partner puts it at the center of potential supply and revenue flows if Trainium is sold externally.
- Cloud computing and AI infrastructure - Amazon's shift toward selling chips or racks externally would expand options for data-center hardware procurement and could influence demand patterns across cloud operators and enterprise data centers.
- Capital markets - Stock reactions in Marvell, Amazon, and Nvidia indicate investor sensitivity to potential new revenue streams and broader AI demand dynamics.
What to watch next
- Marvell's Q2 earnings in August for management updates on design wins or supply agreements tied to Trainium.
- Any public announcements from AWS naming prospective buyers or formalizing sales channels for Trainium or rack-level offerings.