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    Earnings call: AI expected to drive capital expenditures for Amazon in 2024

    Amazon Web Services (AWS) reported an annualized revenue run rate of $100 billion in the first quarter of the financial year 2024 (Q1FY24). AWS’s revenue increased by 16% year on year with growth in both generative artificial intelligence (AI) and non-generative AI workloads. “We remain focused on driving efficiencies across the business, which enables us to invest to support the strong growth we’re seeing in AWS, including generative AI,” Brian Olsavsky, Amazon’s Chief Financial Officer (CFO) said during the company’s earnings call.

    The company reported a capital expenditure (capex) of $14 billion in Q1, which Olsavsky said was expected to be the quarter with low capex this year. He mentioned that Amazon expects an increase in overall capital expenditure in 2024 “driven by higher infrastructure capex to support growth in AWS, including generative AI.” Amazon is not the only tech company that has been doubling down on AI investments. Other tech companies, like Google and Meta, have also mentioned that they expect higher capital expenditures due to higher investments in AI. Meta, notably, mentioned that it would take a “multi-year” investment cycle before its AI offerings become profitable.

    Key points mentioned during the call:

    Amazon sellers are leveraging the company’s AI tools: Amazon’s CEO Andy Jassy explained that over 100,000 of Amazon’s selling partners have used one or more of the company’s generative AI tools. He gave the example of a recent tool that the company had introduced, that enables sellers to provide a URL to their own website, and based on the website, the tool automatically creates high-quality product detail pages for the sellers on Amazon.

    Training on top of AWS: The company explained that it has been seeing people try to figure out how to run their generative AI on top of AWS, including companies like Anthropic.  Jassy pointed out that while at the current stage companies are spending on model training, over time the expenditure will be driven by inference (using the trained model to actually generate outputs). “And so, we also see quite a few companies that are building their generative AI applications to do inference on top of AWS,” he mentioned.

    Amazon SageMaker is helping developers prepare data for AI: “SageMaker, our managed end-to-end service has been a game changer for developers in preparing their data for AI, managing experiments, training models faster, lowering inference latency, and improving developer productivity,” Jassy explained. He mentioned that Workday, reduced its inference latency (time delay between when a machine learning model receives an input request and when it provides the corresponding output) by 80% with SageMaker. Similarly, the retail banking firm NatWest reduced its time-to-value (time taken to generate returns from the projects) for AI projects from 12-18 months down to under 7 months by using SageMaker.

    Amazon Bedrock adds custom model import: Amazon Bedrock allows AWS users access to foundation models (FM) or pre-trained ultra-large machine learning (ML) models used for building and scaling generative AI applications. The company mentioned that it has recently added the custom model import feature to Amazon Bedrock which allows users to import models from SageMaker or elsewhere into Bedrock before deploying their applications.

    Amazon Q becomes generally available: Notably, on the same day as the earnings release, the company also announced the general availability of its AI assistant Amazon Q. The company had announced Q during its Re: Invent conference in December last year. Q enables companies to carry out software development based on their internal data, and enabled developers to generate and test code. “In the near future, Q will help developers transform their dotNET code as well, helping them move from Windows to Linux,” Jassy said during the earnings call.

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    The post Earnings call: AI expected to drive capital expenditures for Amazon in 2024 appeared first on MediaNama.

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