Amazon's AWS CEO Teases Major AI Advancements

The Amazon Web Services re:Invent conference kicks off Monday in Las Vegas, bringing fresh updates on cloud computing and artificial intelligence.

Ahead of the event, Matt Garman, chief executive of Amazon.com Inc's AMZN cloud unit, described AI as a transformative force with endless potential, stating at the WSJ Tech Live conference in October, “It is a transformational technology that is going to change every single company, every single job, every single workflow out there.”

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The conference marks Garman’s first keynote since assuming his role in June. He plans to unveil “real, needle-moving changes” in AI, computing, and other vital areas, The Wall Street Journal reports. These advancements are critical as AWS faces mounting pressure from competitors like Microsoft Corp MSFT and Alphabet Inc GOOG GOOGL.

According to Gartner, Amazon has seen its global cloud market share dip slightly, falling to 39% in 2023 from 39.9% in 2022. Meanwhile, rivals Microsoft and Google have gained traction, with respective market shares increasing to 23% and 8.2% during the same period. Garman acknowledged this competitive environment but stressed AWS’s role as a platform offering diverse AI models, likening its approach to “a bit of everything for everyone.”

Amazon recently doubled its investment in the AI startup Anthropic to $8 billion, signaling its commitment to staying at the forefront of AI development. The collaboration will leverage AWS’s Trainium chips, which Garman claims are cost-effective solutions for training AI models.

Bank of America Securities analyst Justin Post deems the expanded partnership mutually beneficial for the companies. Amazon gains a strong AI partner to help maintain the AI moat, and Anthropic gains more capital. Post also expects the co-development of Amazon’s Trainium chip capabilities could accelerate progress and build credibility for the chips.

Bernstein analyst Mark Shmulik considers Amazon a substantial investment opportunity. Despite planned increases in infrastructure spending next year, Shmulik emphasizes Amazon’s ability to generate returns on such investments, particularly in areas like Prime Video.

Shmulik told Yahoo Finance, “Amazon feels like the name that you can put money to work in and get excited about,” highlighting AWS revenue showing momentum heading into the fourth quarter, Prime Video investments, and more.

In July, JMP Securities‘ Nicholas Jones flagged AWS gaining ground as Microsoft Azure grappled with softness in some European geographies and capacity constraints.

Investors can gain exposure to Amazon through ProShares Online Retail ETF ONLN and SPDR Select Sector Fund – Consumer Discretionary XLY.

Price Action: AMZN stock is up 2% at $212.08 at last check Monday.

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