Amazon’s big Bedrock bet

He also gave Wall Street something to be excited about. “You look at the very substantial, gigantic new generative AI opportunity, which I believe will be tens of billions of dollars of revenue for AWS over the next several years,” he said. In the quarter ending Sep. 30, Amazon reported total sales of $143 billion, beating analyst expectations by $2 billion. Net income clocked in at $9.88 billion, more than triple what Amazon reported the same time last year. The company’s stock rose 7% to $129 per share since Thursday’s close, and a series of investment banks raised their target prices. 

Amazon’s Bedrock product took center stage during the call as the company’s answer to the surging demand by businesses for generative AI tools. Previewed in April and made generally available in September, Bedrock has taken a different approach than its competitors’ consumer-facing AI. The service helps companies build custom LLMs on Amazon’s cloud, based on existing models. Amazon’s own generative AI, called Titan, is available to use, but so are models from Meta, Anthropic, and Stability AI. And it’s designed to give customers peace of mind when it comes to their proprietary data, by ensuring that internal data used with the AI doesn’t leak out to the AI provider, whether that be OpenAI, Meta, or Amazon.

Amazon’s bet is that companies want to experiment with different AI models, and even create “ensembles” that mix various models, rather than commit to a single model. “In these early days of generative AI, companies are still learning which models they want to use, which models they use for what purposes, and which model sizes they should use to get the latency and cost characteristics they desire,” Jassy said during the earnings call. “In our opinion, the only certainty is that there will continue to be a high rate of change.” 

It’s not a bad bet to make. Amazon’s Big Tech competitors have largely focused on building AI models for public use. Microsoft has started building out its enterprise AI options, but it doesn’t give customers the freedom to switch between models like Amazon does. And after being on shaky ground with AWS—growth has cooled, and MoffettNathanson called the segment a “near-term volatility” in a Friday report—Amazon could benefit from the business Bedrock can bring. The company didn’t disclose revenue from Bedrock or other AI products. Sales from AWS, the business segment that houses them, increased 12% year-over-year (though it shyly missed expectations). 

The promise that AI spending is coming is one Jassy has made before, and while Amazon isn’t ready to put numbers to it, executives are doubling down on that guarantee.

“Our generative AI business is growing very, very quickly,” said CFO Brian Olsavsky. “And almost by any measure, it’s a pretty significant business for us already.”

Rachyl Jones

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Today’s edition was curated by David Meyer.

NEWSWORTHY

Cruise pauses. GM-backed Cruise has decided to “proactively pause” its robo-taxi service across the U.S., following a state-mandated pause in California, which followed multiple reports of pedestrian injuries. As CNBC reports, GM CEO Mary Barra said just two days ago that Cruise’s driverless cars are safer than human drivers. Now Cruise is promising to “take time to examine our processes, systems, and tools and reflect on how we can better operate in a way that will earn public trust.”

Intel rises. An analyst-shocking Q4 forecast just added 7% to Intel’s value. As Bloomberg reports, Intel’s sales and profit forecasts beat Wall Street’s average estimates and suggested the worst of the PC sector’s slump may be past. CEO Pat Gelsinger claims to be not so worried about Arm-based desktop CPUs from Nvidia and AMD eating his lunch. Intel’s still not faring well against those rivals in the data center, though.

Apple Watch patents. Apple could be banned from importing its Watches to the U.S. after the U.S. International Trade Commission upheld a ruling that the devices violate medtech firm Masimo’s using-light-to-measure-blood-oxygen patents. Reuters notes that the ITC’s order now faces presidential review, and Apple can also appeal, so the threat is not immediately imminent.

ON OUR FEED

“Chrome exists to serve Google search, and if it cannot do that because it is regulated to be set by the user, the value of users using Chrome goes to almost zero (for me).”

—An internal Google email sent by Android platform partnerships chief Jim Kolotouros three years ago, as made public in Google’s big antitrust trial. CEO Sundar Pichai will testify Monday, aiming to defend Google’s practices around making its search engine the default in smartphones.

IN CASE YOU MISSED IT

The $200 billion playbook that kneecapped Big Tobacco is coming for Mark Zuckerberg and his social media offspring, by Alexandra Sternlicht

One year after the Twitter takeover, Elon Musk and Linda Yaccarino had an all-hands meeting to celebrate—neither of them were actually at the San Francisco headquarters, by Kylie Robison

Twitter’s first year under Elon Musk: Ad revenue in free fall, fights with the EU over false news, and finally hiring a long-awaited CEO, by the Associated Press

Sam Bankman-Fried stumbles through cross-examination—and he wasn’t even in front of the jury, by Leo Schwartz

New Beatles song described by Paul McCartney as ‘quite emotional’ will debut next week after being finished with the help of AI, by the Associated Press

Zoom meetings make you anxious? This company is using AI to make you feel more confident on your next video call, by Megan Arnold and Rachyl Jones

Mercedes exec says EV market is a ‘pretty brutal space’ because price wars and high interest rates are making it an unsustainable business, by Paige Hagy

BEFORE YOU GO

Mac predictions. Bloomberg Apple-whisperer Mark Gurman has a bunch of predictions for what the company will unveil at an event on Monday. The tl;dr is new M3 chips everywhere, bringing with them a similar gaming boost to that enjoyed by the new iPhone 15 Pro, among other things.

Gurman reckons there will be: two new high-end MacBook Pros featuring M3 Pro and M3 Max processors; the first new iMac since mid-2021; and a new trackpad, mouse, and keyboard that all ditch Lightning connectors in favor of USB-C. He says Apple’s under-development “low-end MacBook Pro” won’t appear this time round, and M3-equipped MacBook Airs will only follow in H1 2024, along with refreshed iPads.