Amazon’s Jassy touts AWS, Kuiper opportunities, says generative AI is ‘next pillar’

Amazon (NASDAQ:AMZN) Chief Executive Andy Jassy published his annual letter to shareholders on Thursday and touted the rebound in cloud computing and said generative artificial intelligence is its “next pillar.”

The 56 year-year-old Jassy, who took over for company founder Jeff Bezos in 2021, said Amazon Web Services ended the year on a strong note after customers were worried about cost for much of 2023.

“By the end of 2023, we saw cost optimization attenuating, new deals accelerating, customers renewing at larger commitments over longer time periods, and migrations growing again,” Jassy wrote.

Revenue attributed to AWS increased 13% year-over-year to $91B in 2023, up from $80B in 2022.

Satellite internet opportunity

Project Kuiper, Amazon’s satellite broadband internet initiative, was also highlighted in the letter, as Jassy called it a “very large revenue opportunity” for the company.

“We’re on track to launch our first production satellites in 2024,” Jassy wrote. “We’ve still got a long way to go, but are encouraged by our progress.”

The company launched two end-to-end prototype satellites into space in October. Two months later, Amazon said it had successfully completed tests of an optical mesh network of laser links between its Project Kuiper internet satellites in low Earth orbit.

Project Kuiper, which competes with other satellite internet services such as SpaceX’s (SPACE) StarLink, is Amazon’s low Earth orbit satellite initiative.

It aims to provide broadband connectivity to the 400-500M households that don’t currently have it, as well as providing better connectivity in remote areas.

‘Next pillar of growth’

Jassy talked up artificial intelligence in his 2023 letter to shareholders, but he now believes generative AI is the company’s next pillar.

“While we’re building a substantial number of GenAI applications ourselves, the vast majority will ultimately be built by other companies,” Jassy wrote. “However, what we’re building in AWS is not just a compelling app or foundation model.”

Amazon has three pillars, or areas that it describes as its most successful businesses: retail, Prime and cloud computing.

He added that AWS’s services will hit three layers of the stack —building foundation models, leveraging foundation models and the application layers — “comprise a set of primitives that democratize this next seminal phase of AI, and will empower internal and external builders to transform virtually every customer experience that we know (and invent altogether new ones as well). We’re optimistic that much of this world-changing AI will be built on top of AWS.”

Separately on Thursday, Amazon appointed AI expert Dr. Andrew Ng to its board of directors. Ng is the Managing General Partner of AI Fund and previously worked at Google (GOOG) (GOOGL) and Baidu (BIDU).