Executives of e-commerce giant Amazon (NASDAQ: AMZN) are putting their faith in the firm’s investment in artificial intelligence (AI) as key to higher earnings in the future.
Amazon CEO Andy Jassy made his stance known following a recent earnings call with the company posting above-consensus figures. In its Q3 earnings report, the company reported a revenue of $143 billion—above the expected numbers by investment analysts, as earnings per share stood at 94 cents.
Amid the glowing numbers, Jassy is confident the company’s investment in AI will translate to “tens of billions” for the company’s cloud business. In a statement, the CEO disclosed that the company’s foray into generative AI “is growing quickly,” sending Amazon’s stock price up by 6% within hours.
In the middle of September, the firm announced a $1.25 billion investment in Anthropic AI, a close competitor of OpenAI’s ChatGPT and Google’s (NASDAQ: GOOGL) Bard. Financial analysts are predicting an increase in Amazon’s investment to reach a valuation of $4 billion in the coming years, given the mainstream adoption of generative AI.
Fresh from the highs of the earnings call, Amazon unveiled an AI-powered image generation tool to assist advertisers in creating engaging promotions on its platform.
“Providing tools to make image generation simple and easy is another way for us to support advertisers while also making the ads our customers see more engaging and visually rich,” said Colleen Aubrey, senior vice president of Amazon Ads Products and Technology. “It’s the perfect use for generative AI – less effort and better outcomes.”
Early in the year, Amazon rolled out Bedrock AI, a service offering foundation models to leading AI developers to support the development of large language models (LLMs).
Despite the impressive figures, Amazon Web Services (AWS) sales fell below the expectations of analysts with the division staying afloat thanks to its $7 billion operating income and 12% YoY sales increase. The company says its plays into AI and broader adoption trends “could provide the growth spurt” needed to compete favorably.
AWS competitors, Microsoft’s (NASDAQ: MSFT) Azure and Google Cloud, recorded lackluster numbers amid a frantic rush by the trio to incorporate AI functionalities in their offerings. Amazon has always kept an eye out for emerging technologies, famously beefing its ranks with a digital currency lead in 2021 and teasing a foray into non-fungible tokens (NFTs).
Corporations ramping up AI investments
Technology companies integrate AI into their offerings to gain a competitive edge via chatbots and automating processes. A recent study revealed that 70% of CEOs in the U.S. are ramping up AI investments to improve workplace efficiency, although ethical concerns continue to trail the technology.
There are mounting fears that a widespread integration could trigger mass job cuts in the workplace while copyright concerns continue to take the shine from generative AI. To protect users, Google says it will indemnify its AI users against claims of copyright infringement amid rising class-action suits against AI developers by aggrieved investors.
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