Hi there, it’s Rachyl Jones, the fellow covering tech. Amazon reported earnings on Thursday, and during the call with investors and analysts after the report went live, CEO Andy Jassy said customers are excited about the company’s AI products. If you didn’t catch it the first time, he said it seven more times.
He also gave Wall Street something to be excited about. “You look at the very substantial, gigantic new generative AI opportunity, which I believe will be tens of billions of dollars of revenue for AWS over the next several years,” he said. In the quarter ending Sep. 30, Amazon reported total sales of $143 billion, beating analyst expectations by $2 billion. Net income clocked in at $9.88 billion, more than triple what Amazon reported the same time last year. The company’s stock rose 7% to $129 per share since Thursday’s close, and a series of investment banks raised their target prices.
Amazon’s Bedrock product took center stage during the call as the company’s answer to the surging demand by businesses for generative AI tools. Previewed in April and made generally available in September, Bedrock has taken a different approach than its competitors’ consumer-facing AI. The service helps companies build custom LLMs on Amazon’s cloud, based on existing models. Amazon’s own generative AI, called Titan, is available to use, but so are models from Meta, Anthropic, and Stability AI. And it’s designed to give customers peace of mind when it comes to their proprietary data, by ensuring that internal data used with the AI doesn't leak out to the AI provider, whether that be OpenAI, Meta, or Amazon.
Amazon’s bet is that companies want to experiment with different AI models, and even create "ensembles" that mix various models, rather than commit to a single model. “In these early days of generative AI, companies are still learning which models they want to use, which models they use for what purposes, and which model sizes they should use to get the latency and cost characteristics they desire,” Jassy said during the earnings call. “In our opinion, the only certainty is that there will continue to be a high rate of change.”
It’s not a bad bet to make. Amazon’s Big Tech competitors have largely focused on building AI models for public use. Microsoft has started building out its enterprise AI options, but it doesn’t give customers the freedom to switch between models like Amazon does. And after being on shaky ground with AWS—growth has cooled, and MoffettNathanson called the segment a “near-term volatility” in a Friday report—Amazon could benefit from the business Bedrock can bring. The company didn’t disclose revenue from Bedrock or other AI products. Sales from AWS, the business segment that houses them, increased 12% year-over-year (though it shyly missed expectations).
The promise that AI spending is coming is one Jassy has made before, and while Amazon isn’t ready to put numbers to it, executives are doubling down on that guarantee.
“Our generative AI business is growing very, very quickly,” said CFO Brian Olsavsky. “And almost by any measure, it's a pretty significant business for us already.”
Rachyl Jones
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