AWS CEO talks up AI to focus minds of Wall Street types

Q3 sales below forecasts, profits up, and conversation centers on LLMs and GenAI

Amazon's cloud biz disappointed analysts with lower-than-expected sales as customers generally continue to look for ways to cut costs rather than spin up new instances.

In calendar Q3, AWS booked revenue of $23 billion, up from $20.5 billion a year earlier, marking a slowdown in line with Google and Microsoft's public cloud divisions that also disclosed financial results this week.

The subsidiary made an operating profit of $6.97 billion, up from $5.4 billion, no doubt helped by the job cuts Amazon has undertaken this year.

Ever the polished marketeer, Amazon CEO Andy Jassy, who ran AWS before he got the group boss role, said on a conference call: "While we still saw elevated cost optimization relative to a year ago, it's continued to attenuate as more companies transition to deploying net new workloads.

"Companies have moved more slowly in an uncertain economy in 2023 to complete deals. But we're seeing the pace and volume of closed deals pick up and we're encouraged by the strong last couple of months of new deals signed."

Rather than dwell on customer spending, the CEO steered the conversation to something that Wall Street's financial analysts love hearing about. At the "top of mind" for most customers is generative AI, the CEO claimed. This has three layers starting with the compute to train large language models.

"The key to this compute is the chip inside it. As we've shared, we've been working on custom silicon for training and inference with our Trainium and Inferentia chips, respectively. Recently … Anthropic chose AWS as its primary cloud provider and will use Trainium and Inferentia to build, train, and deploy its future LLMs."

The middle layer is providing LLMs-as-a-service, which is the purpose of the recently introduced Amazon Bedrock, offering access to third-party providers Anthropic, Stability AI, and Coherent AI, as well as Amazon's own Titan LLM.

The top tier of this AI cake is CodeWhisperer, the AI coding companion similar to GitHub Copilot.

Jassy said on the conference call: "The number one enterprise request for coding companions has been wanting these companions to be familiar with customers' proprietary code bases. It's not just having code companions trained in open source code, companies want the equivalent of a long-time senior engineer who knows their code base well."

To emphasize that AWS isn't far behind the AI arms race that Microsoft has made so much of, the CEO said it is "worth remembering" how much customer data already resides on its servers.

"The number of companies building generative AI apps in AWS is substantial and growing very quickly, including Adidas, Booking.com, Bridgewater, Clariant, GoDaddy, LexisNexis, Merck, Royal Philips, and United Airlines to name a few."

Earlier this week, Google Cloud reported revenue of $8.4 billion, up from $6.9 billion reported a year earlier. Microsoft reported sales of $24.3 billion in its Intelligent Cloud division. ®