Amazon (AMZN) shares powered higher Thursday, and traded as the highest levels in more than nine months, after the online retail giant and web services group unveiled a new $100 million investment in generative AI.
Amazon said its new AI project, the AWS Generative AI Innovation Center, will help business clients build and deploy solutions that lever the power of generative AI. Clients, including Lonely Planet, Ryanair, and Twilio, are set to use the Center, Amazon said, which will operate on a no-cost basis.
Amazon Web Services contributed $21.4 billion to the group's overall sales last quarter, a 16% increase from last year, but slowing growth rates and narrowing margins have raised concerns for the division's profitability heading into the second half of 2023.
Bringing new customers into an AI-focused program could create new selling opportunities for AWS as Amazon's broader consumer and e-commerce units see moderating growth as the economy slows and retail sales fade amid elevated inflation rates.
“The Generative AI Innovation Center is part of our goal to help every organization leverage AI by providing flexible and cost-effective generative AI services for the enterprise, alongside our team of generative AI experts to take advantage of all this new technology has to offer," said Amazon Web Services vice president Matt Garman.
"Together with our global community of partners, we’re working with business leaders across every industry to help them maximize the impact of generative AI in their organizations, creating value for their customers, employees, and bottom line,” he added.
Amazon shares were marked 3.2% higher in mid-day trading tor change hands at $128.82 each, a nine-month high that would value the group at around $1.32 trillion.
Amazon said it sees operating income of between $2 billion $5 billion on revenues in the range of $127 billion to $133 billion for the three months ending in June following stronger-than-expected first quarter earnings earlier this year.
Amazon said its first quarter net income was pegged at $3.2 billion, or 31 cents cents per share, down from a split-adjusted profit of 37 cents per share over the same period last year and north of the Street consensus forecast of 21 cents per share.
Revenues rose 9.4% from last year to $127.4 billion, firmly ahead of analysts' estimates of a $124.5 billion tally.
Online sales were 3% from last year to $51.1 billion, suggesting moderately improving consumer spending over the first three months of the year, with the tally largely matching Street forecasts.
