Yahoo Finance technical reporter Allie Garfinkle details Amazon CEO Andy Jassy’s letter to shareholders, discussing trends in artificial intelligence and forward-looking guidance for the e-commerce giant in its own web services arm. I am emphasizing.
video transcript
– We will deliver the latest information from Amazon. Shares rose more than 4% on the day. The company’s CEO, Andy Jassy, released his 2022 letter to shareholders, looking back at the previous year and detailing the company’s future. For more information, he welcomes Allie Garfinkle of Yahoo Finance. Ally, it’s always nice to meet you. What is the biggest lesson you learned from Jussie’s letter?
Ally Garfinkel: So, Dave, if there’s a big headline here, I think it’s this one: Amazon is officially entering the generative AI arms race. Now we knew steak was probably coming: Amazon even says in the letter that it’s been investing in large-scale language models, LLM, and generative AI for some time. To that end, Amazon is launching its own AI-based cloud service called Bedrock. This allows clients to build Generative AI-powered apps using pre-trained models.
Since we’re talking about the risks of AI as a society, it’s important to say that there’s really a lot we don’t know about Bedrock right now, including what kind of data it’s trained on. But overall, this is a very Amazonian view, isn’t it? Very B2B. And many of the clients named are very enterprise-oriented companies, such as Deloitte and Accenture.
To that end, it is important to say that the generative AI market presents a huge opportunity. So from Amazon, I totally got it. I think it’s Grandview Research who said the generative AI market could be close to $100 billion by 2030. And Amazon wants to join too. And today, the answer from Amazon CEO Andy Jassy was a resounding yes, at least for Amazon.
– yes. generate revenue. I’m sorry, Rachelle. please.
– I wanted to say here that generative AI is really getting a lot of attention. But what about the proven Amazon Web Services? What have you heard about it?
Ally Garfinkel: yes. Because frankly, the current Amazon Web Services narrative doesn’t look as optimistic as Amazon’s AI narrative, despite the rise in these stocks. As a matter of fact, I am actually going to read you a quote from the letter. AWS is currently facing short-term headwinds as businesses are becoming more cautious about spending given the current challenging macroeconomic conditions.
Now, reading between the lines, this is pretty bad news for AWS. Now, let’s go back to Q4 2022. If you recall, we saw this small mistake in AWS sales. But this little mistake meant a lot. Around the same time, Microsoft said on its earnings call that it was seeing an impending slowdown in the cloud. For example, I think it’s important that Jassy gives her very encouraging take on AWS. For example, he provides stats that look very good. Last year, AWS grew 29% year over year on his $62 billion revenue base. It’s so wonderful.
But Jassy also said he believes AWS is “in the early stages of its evolution and has extraordinary growth opportunities.” I’m here with you Every cloud expert I talk to says the early days of high growth for AWS and the cloud in general are over. So I think there are still a lot of open questions about where Amazon will land if AWS isn’t a growth monster.
– That’s right. However, at least as of today, investors are clearly seeing some upside here as well, based on that letter. Thank you, Allie Garfinkel, for spelling it out for us.
