Amazon is one of the many businesses racing to cater to the boom in generative AI services. In the three months ending in June, sales of Amazon Web Services (AWS), Amazon’s cloud computing service, rose 12% from the same period prior, beating Wall Street estimates, the company reported.
Quartz Smart Investing with NewEdge Wealth’s Ben Emons
Amazon is a retail giant, but 70% of its profit comes from AWS. The company is also the leader in the global market share for cloud services at 40%. With its cloud expertise, Amazon is seizing the opportunity to benefit from growing AI demand.
“Inside Amazon, every one of our teams is working on building generative AI applications that reinvent and enhance their customers’ experience,” said Andrew Jassey, Amazon’s CEO, on a conference call with analysts and investors on Thursday, Aug. 3. “But while we will build a number of these applications ourselves, most will be built by other companies, and we’re optimistic that the largest number of these will be built on AWS.”
The company also reported that AWS’s operating income generated $5.4 billion, which is down 6% from the same period last year. That comes as companies, across industries, are cutting back on spending, including by switching to lower-cost computing products and trading less in crypto.
Meanwhile, last week, Microsoft reported that its earnings were driven by growth in Azure, its cloud computing service. More broadly, mentions of AI on conference calls have helped propel many tech stocks this year—Amazon’s stock is up 62%, whereas, Microsoft’s stock is up 34% so far this year.
What else is Amazon doing with generative AI?
In April, Amazon further doubled down on AI efforts by releasing Bedrock, which provides developers a platform for building generative AI applications on AWS with pre-trained models from AI startups like Anthropic and Stability AI. Amazon is also creating its own custom AI chips to compete with Nvidia and Intel.
“It’s important to remember that we’re in the very early days of the adoption and success of generative AI, and that consumer applications is only one layer of the opportunity,” Jassey said on the call.
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