Capital One is wary about its rising Amazon cloud AI costs, Nvidia memo shows

• An Nvidia employee said the company discussed AWS alternatives with Capital One.
• Capital One is concerned about rising AI costs with AWS, the employee wrote in a memo.
• Business Insider previously reported that some AI startups are delaying AWS spend.

Capital One is concerned about AI costs rising via its cloud-computing relationship with Amazon and may be looking for alternatives, according to an internal Nvidia document obtained by Business Insider.

In the document, an Nvidia employee wrote that the chip giant talked with Capital One about AI infrastructure alternatives to Amazon Web Services, as the bank was "looking to control costs."

The Nvidia staffer was recapping discussions with Capital One in an internal email after meeting representatives from the bank at a recent tech conference.

"They see their need for GPUs and reasoning models growing and the costs in AWS will soon get out of hand," the Nvidia employee wrote, referring to Capital One.

Nvidia and Capital One discussed "AI factory and neo-clouds," according to the email. An AI factory is an in-house data center that a company can build to train and run AI models as an alternative to renting compute from a third party. Financial institutions can use this infrastructure for tasks such as fraud detection, customer support, and algorithmic trading, according to Nvidia.

Neoclouds are upstart cloud providers, often powered by Nvidia hardware, that focus on AI workloads, whereas AWS supports a much broader range of computing needs. Top neocloud players include CoreWeave, Lambda, Crusoe, and Nebius. Nvidia has been working closely with several of these players, in part to reduce its reliance on established cloud giants as customers.

The Capital One situation underscores a key dynamic in the AI boom. Companies are racing to adopt generative AI but also trying to mitigate rising cloud costs. This new technology has great promise, but developing and running AI models and AI applications can be expensive.

Large companies also regularly assess their cloud spending, including varying setups that increasingly incorporate multiple providers. Forty-three percent of companies use more than two public cloud providers, according to a recent RBC Capital report.

"We continue to be committed to AWS as our predominant strategic cloud partner," a Capital One spokesperson wrote in a statement. Nvidia declined to comment.

"Our pricing philosophy is to work relentlessly to take cost out of our own cost structure and to pass those savings back to our AWS customers in the form of lower prices," an AWS spokesperson said. "It's easy to lower prices, it's much harder to be able to afford to lower prices, and at AWS we work really hard at that."

Capital One isn't the only company taking issue with AWS costs. Business Insider's Eugene Kim reported in October that AI startups are increasingly delaying traditional AWS spend in favor of AI model and developer tools, according to internal Amazon documents from March and July.

The documents said that 90% of startups in Radical Ventures' portfolio were building primarily on rival clouds due to AWS costs. Amazon also noted internally that there was increasing demand from customers for neocloud providers, which let them rent GPU power in small chunks and only pay for what they use.

When that story published in October, an AWS spokesperson said Business Insider was "using old data to reach outdated conclusions," noting that "AWS remains the top choice for startups to build because we offer the best core services as well as the most innovative and powerful generative AI offerings."

Have a tip? Contact this reporter via email at gweiss@businessinsider.com or Signal at @geoffweiss.25. Use a personal email address and a nonwork device; here's our guide to sharing information securely.