Amazon CEO: GenAI is already 'multi-billion-dollar' business

  • AWS sales jumped double digits to $25 billion in Q1 2024

  • Amazon CEO Andy Jassy said most cloud cost optimization programs have wound down and companies are investing in GenAI

  • AWS earnings contributed to a 21% increase in Q1 revenue for the overall cloud market

Generative artificial intelligence (GenAI) may still be a nascent technology, but it’s already paying dividends for cloud hyperscalers. Case in point: Amazon Web Services (AWS), which saw revenue jump 17% to $25 billion and operating income nearly double to $9.4 billion in Q1 thanks in large part to a boost from GenAI.

During an earnings call, Amazon CEO Andy Jassy said with cloud cost optimization programs largely in the rearview, companies are now turning their attention to investments in generative AI running on AWS infrastructure.

“We see considerable momentum on the AI front where we've accumulated a multi-billion-dollar revenue run rate already,” Jassy stated.

New Street Research analysts acknowledged in a note to investors that there’s some debate as to what counts as generative AI revenue. But they pointed out Jassy’s comments around plans to expand availability of AWS’ Trainium 2 chips later this year and in early 2025 “aligns well with what we view as the vast majority of these revenues, which is gen AI-related training and inference workloads” in the AWS cloud.

Looking ahead, Jassy said that while companies spending big today on model training, once those models go into production significant revenue will instead start to flow from inferencing.

“You spend much more in inference than you do in training because you train only periodically, but you're spinning out predictions and inferences all the time,” he explained.

The CEO added that companies' choice of AI infrastructure provider largely comes down to what services the vendor provides. He said “tens of thousands of companies” are already building on Amazon Bedrock due to its wide selection of large language models and features on offer.

“We have a meaningful edge on the AWS side so that as companies are now getting into the phase of seriously experimenting and then actually deploying these applications to production, people want to run their generative AI on top of AWS,” he said.

Q1 recap

AWS was the last of the big three U.S. hyperscalers to report. Synergy Research Group noted that revenue from the overall cloud infrastructure services market jumped 21% in Q1 to $76.5 billion. For those counting, that’s an increase of $13.5 billion from Q1 2023.

Here’s a visual of the market share breakdown:

cloud market share Q1 2024

“In terms of annualized run rate we now have a $300 billion market which is growing at 21% per year. We will not return to the growth rates seen prior to 2022, as the market has become too massive to grow that rapidly, but we will see the market continue to expand substantially,” Synergy’s Chief Analyst John Dinsdale stated. “We are forecasting that it will double in size over the next four years.”

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