Walmart ramps up cloud efforts by investing in NVIDIA (WMT)

Walmart Ecommerce

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Walmart is investing in NVIDIA chips, which are high-level graphical processing units (GPUs), in order to build out its cloud network, Retail Dive reports.

The company is reportedly looking to build its data centers 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. Walmart’s investment in GPUs could lead the retailer to build out its AI capabilities in general, helping it battle Amazon and succeed in the changing retail landscape.

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 hugepart 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.

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