Amazon CEO explains how the company will compete in AI race

Amazon CEO Andy Jassy doesn’t believe the retail and cloud computing giant should be counted out of the artificial intelligence race just yet.

In a wide-ranging interview with CNBC, Jassy challenged the notion that Amazon has fallen behind in AI as Microsoft and Google add chatbots to consumer products like their search engines, likening it to the “hype cycle” before the “substance cycle.”

“I think most people are focused on the applications, you know, things like ChatGPT brought everybody’s awareness up, but I think of generative AI as having three macro layers,” Jassy told Jon Fortt in an interview that aired on “Closing Bell Overtime” late Thursday. “I think they’re all really big and important.”

Jassy has said Amazon intends to invest in AI across the company, and that AI programs have the potential to improve “virtually every customer experience.” But he specifically pointed to Amazon Web Services as one business that can capitalize on the buzz around AI over the long term.

Earlier this year, AWS unveiled a generative AI service called Bedrock, where clients can use language models from Amazon and other startups to develop their own chatbots and image-generation services.

AWS has also developed its own AI-specific chips, called Inferentia and Trainium, which aim to make it easier for developers to run large AI language models in the cloud. It’s going up against Nvidia, whose powerful semiconductors have dominated the market for AI chips.

Amazon expects its chips to have “much better price-performance than you’ll find anywhere else,” Jassy said.

Through Bedrock, Amazon’s custom chips, and other services like CodeWhispherer, which generates and suggests code for developers, Jassy said Amazon stands to have a real edge in AI.

AI has shaped up to be a rare area for investment inside Amazon as Jassy has culled some of the company’s riskier bets and looked to cut costs due to slowing sales and a gloomy economic outlook. Amazon recently underwent the largest layoffs in its history, cutting 27,000 employees. It has also paused expansion of its Fresh supermarket and Go convenience store chains, while ending a virtual tours service, a video calling device for kids and its Care telehealth service.