Using Generative AI, Amazon CEO: “We’re Democratizing It”

(CTN News) – A second annual shareholder letter from Amazon CEO Andy Jassy indicates that the company’s “peak days” are ahead, despite “turbulent times.”

It is the large language models, and the Generative AI projects specifically, that will be “transformative” for the company, he said.

• Jassy wrote that these two areas are “essential to Amazon’s ability to innovate in every area of our business for many decades to come,” and are areas in which the company has heavily invested.

• “LLMs and Generative AI will be big news for our customers, our shareholders, and Amazon,” he concluded without further detail as he “could write an entire letter” about its benefits.

• In addition, Amazon Web Services announced today new tools that are designed to maximize the usage of artificial intelligence.

Amazon is in a state of transition, like numerous other companies within and outside of its peer group that have benefited greatly from pandemic trends and are now experiencing those trends evaporating at nearly the same rate.

• The company’s profit engine, Amazon Web Services, grew 29% in 2022, however, “it is facing short-term headwinds right now as companies are being more cautious in their spending,” Jassy notes, reiterating what other executives have said previously.

• In addition, since the company has doubled its 25-year fulfillment center footprint in two years, when its consumer business has grown by 77% annually between 2019 and 2022, “a lot of optimization is needed” to reduce operating costs.

• While simultaneously, Jassy continues to make bets on healthcare and satellite internet, which he believes could pay off in a similar manner to Amazon Web Services.

Over the past 12 months, Amazon’s stock has dropped by nearly 40% as investors reevaluate its growth strategy.

• Since Meta announced more layoffs and a focus on generative artificial intelligence, its shares have risen nearly 20% since citing AI as a key area of focus.

In our opinion, this year’s letter was short on operating principles and thought leadership – “Brace Yourself for Failure” and “You Need Blind Faith, But No False Hope” were mentioned last year – but very detailed in describing why several of the company’s most significant units operate as they do.

• The letter, which was published ahead of the upcoming earnings season, seems to be a cheat sheet of what will likely be Amazon and Jassy’s major talking points during his third year as CEO.

• It is noteworthy that Jassy addresses the company’s upcoming 3-day minimum in-office policy directly: “we do not believe [working from home] is the best option in the long-run.”

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