Amazon, the e-commerce giant, is increasing its investment in artificial intelligence (AI) and reducing spending on its logistics infrastructure, including warehouses. The move comes as the company focuses on developing its technology infrastructure and seeks to expand its AI and machine learning capabilities.
In a recent call with analysts, Brian Olsavsky, Amazon's CFO, said that the company is spending less year-over-year on core fulfillment and transportation areas, which are being repurposed to fund large language models and generative AI. He added that the company is adding more dollars to AI development, specifically to Amazon Web Services (AWS), which provides AI and machine learning services to clients like Stability AI and Hugging Face.
Last year, Amazon spent $58.3 billion in capital expenditures, emphasizing its investment in technology infrastructure. Amazon CEO Andy Jassy has also reiterated the company's commitment to AI, stating that Amazon aims to develop large language models, the technology behind generative AI tools like chatbots. Jassy believes that generative AI tools that assist coders will be among the most “compelling” and that Amazon also aims to create the “world's best personal assistant.”
Jassy mentioned that Amazon's voice assistant device, Alexa, currently uses a large language model, but the company is developing a much larger and more generalized model to accelerate its vision of creating the world's best personal assistant.
Although Amazon's stock jumped more than 10% in after-hours trade, the gains were surrendered by the end of the conference call, with Jassy warning that companies are being cautious in their spending on cloud services during this uncertain time. Nonetheless, the stock has risen more than 25% this year, indicating investor confidence in Amazon's long-term vision.
What does the future hold for AI and eCommerce in the coming years?
The impact of AI on ecommerce is expected to be significant in the coming years. With the help of AI, retailers can offer personalized recommendations, optimized search results, and enhanced customer experiences. AI-powered chatbots can help customers find what they're looking for and even place orders, providing 24/7 customer support without requiring human intervention. AI can also be used to streamline supply chain operations, improving inventory management and reducing the time it takes to get products to customers. As AI technology continues to advance, it is likely that we will see even more innovative uses for it in ecommerce. Retailers who invest in AI now will be better positioned to compete in the future and deliver exceptional customer experiences that keep shoppers coming back.
