Amazon Jumps 4% on Expanded AWS Chip Deal: Why Is NVIDIA Falling 4%?
Amazon is surging 4% on a massive GPU expansion deal with the very chip supplier that is simultaneously sinking 4% on the same news. The split tells a story about where Wall Street thinks AI infrastructure profits are really going.
Shares of Amazon (NASDAQ:AMZN | AMZN Price Prediction) are moving hard against their own sector this afternoon after the company and its largest chip supplier confirmed a sharply expanded infrastructure deal. Amazon stock is up 4% to $265.25, extending a run that had already carried the shares up 11% year to date through Thursday’s close. The catalyst is a joint announcement to deploy far more GPU capacity for AI, robotics, and agentic workloads.
The twist is on the supplier side. NVIDIA (NASDAQ:NVDA) stock is down 4% to $218.68, even as NVIDIA is the vendor selling those chips. NVIDIA stock had been up 22% year to date through Thursday’s close, and the current slide traces to a broad pullback in semiconductors rather than to the announcement itself.
The Technology Select Sector SPDR ETF (NYSEARCA:XLK) is down 1% to $185.89, and the Invesco QQQ Trust (NASDAQ:QQQ) is down 0.7% to $715.86. Amazon’s rally is running directly against both.
AWS Chip Deal Fueling Amazon
The catalyst was confirmed by both companies: Amazon Web Services and NVIDIA announced an expanded partnership to deploy 2 million additional GPUs and next-generation infrastructure for agentic and physical AI. The announcement was made Wednesday evening, August 26, and coverage has continued through today, with TechCrunch characterizing the move as Amazon tripling its NVIDIA chip order on surging demand. Scope extends across AI infrastructure, agentic AI, and warehouse robotics.
The market is treating the deal as validation of AWS momentum. Second-quarter AWS revenue rose 37% year over year to $42.23 billion, its fastest growth in 18 quarters, and CEO Andy Jassy said the AI and Chips businesses each eclipsed run rates of more than $25 billion. The buildout has to be powered, cooled, and networked by somebody, which is the whole premise of our free report on seven AI infrastructure suppliers that aren’t chipmakers. Evercore ISI raised its Amazon price target to $355 from $315.16 after a survey pointed to strong Alexa AI shopping conversion.
Why NVIDIA Stock Is Falling on Its Own Good News
NVIDIA is the company selling those chips, so the divergence looks strange, but the two moves have different causes. NVIDIA stock is sliding alongside a broad pullback in semiconductors and AI hardware, and no NVIDIA-specific catalyst has been verified today. The deal is a positive for both parties on its face.
The fundamentals from Tuesday’s report also raised the bar. NVIDIA delivered revenue of $96.221 billion and Data Center revenue of $89.023 billion, with CEO Jensen Huang stating that “AI has reached its inflection point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue.” Management also warned that “memory scarcity today is being driven in large part by the AI build-out itself,” and expects gross margin to trough near 71% to 72%, with that margin risk weighing on the group.
Peers Ride the Same Split
Microsoft (NASDAQ:MSFT) stock is up 2% to $517.09, and Alphabet (NASDAQ:GOOGL) stock is up 2% to $346.45. Hyperscale platforms with visible customer commitments are catching a bid while their upstream chip supplier lags.
The bear case on Amazon hasn’t disappeared. Amazon spent $131 billion on capital expenditures in 2025, up from $83 billion in 2024, and raised its 2026 figure to approximately $220 billion, while trailing free cash flow turned to negative $7.6 billion against $161.4 billion in operating cash flow over the twelve months ended June 30. Some traders are treating the deal as confirmation of AWS scale, while others focus on capital intensity and depreciation pressure.
What to Watch Next
Investors can watch for Amazon stock holding its gains as the technology sector weakens, alongside NVIDIA stock stabilizing once semiconductor selling exhausts. Options positioning skews light on downside insurance, with NVIDIA’s put/call ratio at 0.56 across the full chain.
Given the split tape, position sizing matters more than direction today. Traders who are comfortable with volatility can keep their exposure modest on both names, treating any Amazon extension above recent highs and any NVIDIA reclaim of its post-earnings level as the next technical checkpoints. The forward story hinges on 2027 AWS monetization and NVIDIA supply catching up to demand.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.
His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.
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