Amazon.com Inc. AMZN announced that its generative AI business has reached a "multibillion-dollar" revenue run rate, during the post-Q1 earnings call on Tuesday.
What Happened: Amazon CEO Andy Jassy revealed the significant achievement during the company’s Q1 2024 earnings call.
The company’s generative AI business has been witnessing robust demand, with customers expressing interest in leveraging AI to transform their businesses and enhance customer experiences, Jassy said on the call.
Amazon's cloud computing business, Amazon Web Services (AWS,) is already growing faster than the company as a whole – AWS revenue surged 17% year-on-year in Q1 2024, while overall revenue grew 13%.
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Now, Amazon has revealed that its AWS business is getting another boost thanks to generative AI. Its enterprise customers are "quite excited" about leveraging this leading-edge technology.
"Our AWS customers are also quite excited about leveraging gen AI to change the customer experiences and businesses. We see considerable momentum on the AI front where we’ve accumulated a multibillion-dollar revenue run rate already," Jassy said.
Amazon CFO Brian Olsavsky echoed Jassy's sentiments, adding, "We are seeing strong demand signals from our customers and longer deals and larger commitments, many with generative AI components."
He added that going forward, this will further fuel capital expenditure growth – Amazon spent $14 billion in capex in Q1 2024, and Olsavsky expects it to be the "low quarter for the year."
"Those signals are giving us confidence in our expansion of capital in this area."
Why It Matters: The announcement comes on the heels of Amazon’s strong Q1 2024 earnings, where the company reported a revenue beat and its AWS segment hitting a $100 billion annual run rate.
AWS's trailing 12-month revenue, at $94.4 billion, is higher than the revenue of 466 companies in the S&P 500 index. Tesla Inc. CEO Elon Musk expressed surprise at this, saying, "Wow."
Jassy also expressed optimism about the future of AWS, highlighting the potential for AWS and the rise of gen AI, which is expected to be predominantly cloud-based over the next 10 to 20 years, presenting a significant opportunity for AWS.
Price Action: At the time of writing, Amazon’s shares were up 2.45% in premarket trading on Wednesday, after closing at $175 on Tuesday, according to Benzinga Pro.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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