Amazon Announces Generative AI Platform Bedrock To Boost Sluggish Cloud Services
Key takeaways
- Amazon has unveiled its Bedrock platform for building AI apps
- The announcement came as CEO Andy Jassy acknowledged ‘short-term headwinds’ for AWS services
- Amazon has laid off 27,000 workers since the economic downturn began last year
Amazon has thrown its hat into the AI ring, revealing its new Bedrock services to help build AI apps for third parties. It’s a clever move for the e-commerce giant, which has recently seen some troubled times with mass layoffs and disappointing profit results.
Investors are keen on the announcement, which focuses on getting more AI companies to build enterprise services through AWS. Let’s get into the details.
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What’s Amazon’s AI announcement?
Amazon Bedrock is a platform for building generative AI apps with pre-trained models from start-ups like Anthropic and Stability AI. It’s light on details on how the platform will work in practice, other than it’s available in a limited preview aimed at enterprises, and that it’s part of Amazon’s “commitment to long-term thinking”.
Amazon is clearly thinking about the back-end side of AI rather than anything flashy. It also announced general availability of its AWS Inferentia2 chips for training AI models, new Trainium chips for AI computing resources and free access to its AI-powered coding companion.
Amazon’s cloud system problems
It’s clear Amazon wants to play to its strengths and boost AWS rather than try and compete with Microsoft and Google’s AI efforts. It’s a smart move given “AWS faces short-term headwinds right now as companies are being more cautious in spending,” CEO Andy Jassy said in his annual shareholder letter.
AWS is the single largest contribution to Amazon’s operating income, delivering $5.2 billion in its Q4 2022 results. Getting third parties to build their AIs is a solid long-term positioning for Amazon, and it was rewarded with a 4.67% share price increase on the same day.
Amazon stock is still down 32% over a 12-month period, and it’s laid off 27,000 employees in two mass layoff rounds. If the shopping giant is “investing heavily” in generative AI, this could be the turnaround needed for investor confidence and the share price.
The bottom line
Amazon has its fingers in many pies, and its investment in AWS over the last decade has paid off. It’s a natural extension for them to jump onto the AI bandwagon and the focus on enterprise AI is a different positioning to competitors in the space that could pay off for the stock price in the long run.
Of course, now we just need Amazon Bedrock to deliver — so the markets will keep a close eye on whether this is a bane or boon for AWS.
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