Amazon's market cap soared to nearly š $2Tr today with shares hitting an all time high. Key drivers? Return of robust cloud growth and a strategic focus on AI.
š Andy Jassy highlighted these pivotal shifts in today's shareholder letter and interviews
His insights reveal a move in enterprise spending from optimization back to cloud migration and AI implementations:
"The last couple years, companies have tried to save money however they could. We saw that a lot in our AWS business...
But I think a lot of that cost optimization has attenuated, and we've seen a lot of the deals that people were talking with us for a long time... are starting to move. Migrations have picked up again. The pipeline is really full.
I think people moved from largely trying to save costs to figuring out how to modernize their infrastructure again, move from on premises to the cloud and use generative AI to change their business."
He also underscored the vast potential available in cloud migration: āwith a cloud computing business at nearly a $100B revenue run rate, more than 85% of the global IT spend is still on-premises. These businesses will keep shifting online and into the cloud.ā
šÆ AI as a New Core āPrimitiveā
Perhaps the most interesting in Amazon CEO insights is the expansion of Amazon's "primitives" (company's building blocks) to include Gen AI.
Additionally, the appointment of Dr. Andrew Ng to Amazon's Board of Directors - a famous AI innovator and Stanford professor - shows Amazon's commitment to leading in AI.
Jassy emphasized the role of Gen AI in Amazon's strategy, outlining the 3 layers of the GenAI stack, āeach of which is gigantic, and each of which weāre deeply investingā:
1ļøā£ Foundation Model Layer: Aimed at developers and businesses focused on building foundational models (FM), supported by Amazon's custom-built chips and software solutions for model training and inferences.
2ļøā£ Managed Service Layer: For customers interested in leveraging existing models customized with their data, within a secure, managed service environment.
3ļøā£ Application Layer: Amazon working to create a wide array of GenAI applications.
š½ Jassy's remarks crystallize his vision that GenAI may be the most significant tech transformation since the cloud and perhaps even the internet.
But AI itself will be fully built on cloud. And Amazon is going deep on both.
āGenerative AI may be the largest technology transformation since the cloud (which itself, is still in the early stages), and perhaps since the Internet.
Unlike the mass modernization of on-premises infrastructure to the cloud, where thereās work required to migrate, this GenAI revolution will be built from the start on top of the cloud.
The amount of societal and business benefit from the solutions that will be possible will astound us all.ā
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