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Amazon is Spending more on AI and its Cloud Business

Amazon is reportedly reducing spending on its logistics infrastructure and is doubling down on investing in artificial intelligence (AI), according to statements made by the company’s CFO, Brian Olsavsky. He stated that Amazon is spending less on its core fulfillment and transportation areas year-over-year and is instead allocating more funds to large language models and generative AI. This move appears to be part of the company’s broader efforts to focus on developing its technology infrastructure.

Amazon spent approximately $58.3 billion in capital expenditures last year, as per its 2022 annual report, with a particular focus on developing its technology infrastructure. The company’s CEO, Andy Jassy, has reiterated this commitment, stating that Amazon will be one of the few companies prioritizing the development of large language models.

Jassy noted that developing large language models can take many years and require billions of dollars, but he believes generative AI tools that assist coders will be the most compelling. Additionally, Amazon aspires to develop the world’s best personal assistant and is working on a new and larger language model to support this goal.

The shift in focus towards AI investments could have a significant impact on Amazon’s business strategy, especially as the company aims to stay ahead of its competition. Amazon Web Services (AWS), which provides AI and machine learning services, is already working with several unicorn customers. The company’s stock jumped more than 10% in after-hours trade, reflecting the market’s optimism for Amazon’s AI investments.

Overall, Amazon’s pivot towards AI could help the company become more efficient, reduce costs, and improve its customer experience. However, it remains to be seen how this shift will impact the company’s logistics and infrastructure operations in the long run.