Why SAP, Salesforce + Workday Love Billion-Dollar Chip Plan from AWS

Bob Evans (0:00)

Hello, my friends, welcome back to Cloud Wars Minute. Wanted to talk about an interesting development at AWS, which over the past several quarters has been on a very nice upswing in its business, powered in part by their development of what is now a very large and extremely fast growing custom chips business. So I think as a result of this latest move by AWS, it's gonna make SAP, Salesforce and Workday all very happy with AWS and give them more reason to continue considering AWS as one of their primary hyperscaler partners. That comes down to a billion dollar chip deal that AWS has just secured with Synopsys, chip designer that AWS has been working with closely over the last several years as AWS has built what is now a chip business, Custom Silicon, that has got an annualized run rate of $25 billion, and AWS says it's growing in triple digits, so at least 100% growth rate. Pretty big business there. Well, this new deal between AWS and Synopsys calls for the creation of new chips that they say are application-optimized solutions. So the incredible advances in the power and capability of Silicon are now being tied directly into helping enterprise applications run more quickly, more securely, more insightfully, and to handle the incredible volumes of data and transactions that are coming forward now here in the AI economy. So this is something that I think will make not only those software vendors happy, but the point is to have customers of the joint customers of AWS and these big enterprise software, enterprise apps vendors, not just these three, but many others. I think these are three of the biggest to have their customers say, wow, this new chip plus those new applications tied in with agents, I'm really seeing how this is working better than ever before. So the performance, the speed, the capability, the power, the insights, data reasoning, all that tied in with application-optimized solutions.

So everybody should benefit from this pretty well.

I think this is something that, as I mentioned, has been a huge part of the resurgence of AWS last quarter. Ended June 30th, AWS growth rate jumped to 37 percent, by far the highest it's had in several years. We'll see some new numbers from AWS coming out at the end of this month or early November for Q3. But I think this is a very smart move on their part. They've got a lot of momentum here with this chip business. They've got the capital to be able to handle that. Plus, what they're doing with their data center build outs. And it does create a unique differentiation for AWS among hyperscalers. So they're working hard on that. And again, I think this is something that shows that AWS has fully realized they can't just sort of ride on the past. The things that got them here won't take them there. So this custom silicon business is something where they find they can really make a difference and extends everything from training to how they're, you know, higher security, now sorts of chips. And now this new era that they're calling application optimized solutions. So this demand for more speed, more power, more insight, more security for all of these I think comes along in a time when business customers are starting to say, yeah, I'm going to use a lot of Agenic AI, but I'm also going to continue to use the enterprise applications that are such an integral part of my business and how I work and where I work. Although Agenic AI is going to change the role of those applications. And I think AWS is in a good spot for this. Got a detailed article that will go into more detail about all this with some comments from each company coming up later this morning on cloudwars.com. Thanks for being with us here at Cloud Wars Minute. I hope you have a fantastic day.