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Andy Jassy Thinks AI Can Save Amazon’s Troubled Cloud Business

Amazon's AWS is equipped with AI that can help daily businesses that use it for data purposes helping it's cloud business.

Amazon, Inc. (NASDAQ:AMZN) stock continues to bounce around the bottom and the first-quarter earnings did little to lift sentiment.

Seattle, Washington-based Amazon reported first-quarter sales and earnings per share that exceeded expectations. Investors, however, were worried about slowing growth in the Cloud segment, which is the e-commerce giant’s fastest-growth and high-margin business.

Andy Jassy on stage at the 2022 New York Times DealBook on November 30, 2022 in New York City. THOS ROBINSON/BENZINGA

Net sales from Amazon Web Services, or AWS, rose 15.8% year-over-year to $21.35 billion. The growth marked a slowdown from the 20.2% increase seen in the fourth quarter when AWS’ contribution to total revenue was at $21.38 billion.

AWS contributed $5.12 billion to Amazon’s operating profit, helping to offset the $1.25 billion in operating loss suffered by the international e-commerce business.

Customers continued to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter, said CFO Brian Olsavsky. He expects these optimizations to continue into the second quarter, with April revenue growth rates about 500 basis points lower than was seen in the first quarter.

Amazon has other plans to reignite growth in its most lucrative segment. CEO Andy Jassy said on the earnings call that the company is continuing to innovate in AWS.

“Our recent announcement on Large Language Models and generative AI and the chips and managed services associated with them in another recent example,” he said.

“And in my opinion, few folks appreciate how much new cloud business will happen over the next several years from the pending deluge of machine learnings that are coming.”

While answering a question on the long-term AI and LLM potential out of AWS, Jassy said Amazon has been making substantial investments in machine learning for over 25 years. This fuels the company’s e-commerce recommendations and drives the Pick Pass and fulfillment centers, he added.

The models present six or nine months ago weren’t compelling, the CEO said. “And they have gotten so much bigger and so much better, much more quickly … it really presents a remarkable opportunity to transform virtually every customer experience that exists and many that don’t exist that weren’t really that easily made possible before,” he said.

Jassy also said a lot of machine learning training inferences that are used to build LLMs will run on AWS. He highlighted “Amazon Bedrock,” which helps build generative AI-powered apps via pre-trained models. It also offers access to “Titan” foundation models, a family of models trained in-house by AWS.

Amazon also plans to build applications that are going to be built on top of those LLMs, the executive said.

AI with AWS Machine Learning offers data scientists, data engineers, and business analysts that can deploy their ML models that can stabilize their workflow, infrastructure, and tools.

AWS is the most trusted product that is used by most Fortune 500 that includes Netflix, McDonald’s, Comcast, General Electric, and Capital One. 

Amazon is currently offering an AI access code in order to undercut Microsoft.

Produced in association with Benzinga

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