As the Magnificent Seven’s rally slows, investors will be looking ever more closely at their future potential — and AI will be the key to pulling away from the competition.
Though Amazon (AMZN) spans retail, groceries, healthcare, consumer electronics, and more, it’s Amazon Web Services, or AWS, that Wall Street is always watching. While Microsoft’s (MSFT) stock was richly rewarded for its cloud performance after its third quarter earnings beat, Amazon and Google (GOOG, GOOGL) were punished for their underwhelming cloud numbers.
Expanding — and monetizing — AWS will be essential to Amazon’s growth. At its re:Invent conference last week, Yahoo Finance spoke to a number of key executives about AWS’s future, where generative AI appears to take center stage.
AWS doesn't disclose how many customers it has, but many estimates suggest it has a customer base of well over one million businesses. The cloud giant, which generated north of $80 billion in revenue in 2022, notably has many public-sector clients that it's been working with through the AI boom.
"Those customers in particular need help taking advantage of the latest technologies," said Dave Levy, vice president of AWS's worldwide public sector.
These clients are already looking to 2024, where increasing computing power is needed to adopt tech such as training and deploying large language models (LLMs). Organizations that are moving to the cloud are likely better equipped to take on the challenge, Levy told Yahoo Finance.
Next year will bring more meaningful and substantial customer adoption of generative AI, where it starts to create measurable value and ROI, per AWS vice president of data and AI Swami Sivasubramanian.
For example, businesses that have seen chat agents like OpenAI’s ChatGPT or Anthropic’s Claude write haikus and essays will try to leverage the technology to write analysis based on its internal customer and performance data, says Sivasubramanian.
And managing and keeping that data safe will be key for customers in 2024, said AWS vice president of technology Mai-Lan Tomsen Bukovec.
"Everything that you do in generative AI needs to be behind your data," she told Yahoo Finance.
But AWS’s growth won't come from just AI. Its enterprise customer ecosystem includes AWS Marketplace, a service that will be an area of investment moving forward, said AWS vice president of worldwide channels & alliances Ruba Borno.
The marketplace is "the everything store, but for enterprise IT," per Borno. It allows anyone with an AWS account to buy and access third-party software and tech, such as cybersecurity services or data analytics platforms. All billing is centralized through AWS, streamlining the procurement process.
Amazon will be simplifying the fee structure for the services offered on its marketplace, and reducing its own fees to make it easier for vendors to reach more customers.
"Also, we're continuing to invest in providing more vendor insights to our customers... [and] improving discoverability in the marketplace," added Borno.
Like Apple and Google have experienced with their app stores, growing use of its marketplace will help Amazon lock in AWS customers, giving it an edge against other cloud providers.
But in the end, it's the AI race that has captured the imagination of AWS executives. To that end, AWS recently announced a deepening partnership with chipmaker Nvidia (NVDA), additional safety features for its generative AI platform Bedrock, and access to AI models from Anthropic, Cohere, Meta (META), Stability AI, and its own Amazon Titan for customers.