Amazon continues to heavily invest in generative artificial intelligence (Gen AI) and, although it’s still a nascent category, Gen AI revenue is growing quickly, according to company executives.
“Gen AI is and will continue to be an area of pervasive focus and investment across Amazon,” Andrew Jassy, its CEO and president, told analysts Feb. 1, during an earnings call for Amazon’s fourth quarter (ended Dec. 31) that was also webcast.
That is “primarily because there are few initiatives, if any, that give us the chance to reinvent so many of our customer experiences and processes,” according to Jassy. “We believe it will ultimately drive tens of billions of dollars of revenue for Amazon over the next several years,” he predicted.
Last year was also a “very significant year of delivery and customer trial for generative AI … in AWS,” he said. “You may remember that we’ve explained our vision of three distinct layers in the Gen AI stack, each of which is gigantic, and each of which we’re deeply investing. At the bottom layer, where customers who are building their own models run training and inference on compute with a chip is the key component in that compute, we offer the most expansive collection of compute instances with NVIDIA chips,” he said.
Amazon also has customers who “would like us to push the price performance envelope on AI chips, just as we have with Graviton, for generalized CPU chips,” he added.
There are already “several customers using our AI chips,” including Airbnb and Ricoh, he noted.
“In the middle layer, where companies seek to leverage an existing large language model, customize it with their own data, and leverage AWS security … we’ve launched Bedrock, which is off to a very strong start with many thousands of customers using the service after just a few months,” he said.
Meanwhile, “customers are also excited about our approach to generative AI,” according to Brian Olsavsky, Amazon CFO.
Although it is “still relatively early days,” the CFO said, “revenues are accelerating rapidly across all three layers and our approach to democratizing AI is resonating well with our customers.”
Olsavsky added: “We have seen significant interest from our customers wanting to run generative AI applications and build large language models and foundation models, all with the privacy, reliability and security they have grown accustomed to do” with Amazon Web Services (AWS).
Over the next several years, Amazon customers will “continue to make progress on newer business investments that have the potential to be important to customers and Amazon long term,” the company said.
“What customers have learned at this early stage of Gen AI, is there’s meaningful iteration required in building a production Gen AI application with the requisite enterprise quality at the cost and latency needed,” he said. “Customers don’t want only one model, they want different models for different types of applications, and different size models for different applications.”
Amazon is “building dozens of Gen AI apps across Amazon’s businesses, several of which have launched and others of which are in development,” Jassy said.
As an example, he pointed to the launch of Rufus, a shopping assistant trained on Amazon’s product and customer data that he said, “represents a significant customer experience improvement for Discovery.”
Q4 AWS revenue grew 13% year-over-year in Q4 vs. 12% year-over-year in Q3. “We’re now approaching an annualized revenue run rate of $100 billion,” according to Amazon. Q4 profit grew to $10.6 billion ($1 per diluted share) from $0.3 billion (3 cents per diluted share) in Q4 the prior year.
