Amazon Pushes AI Frontier as AWS Revenue Hits US$108bn

Amazon is ramping up its focus on AI, committing to new technologies, in-house chips and expanded generative AI services, all while its cloud business Amazon Web Services (AWS) posts US$108bn in annual revenue.

In his latest letter to shareholders, Chief Executive Officer Andy Jassy outlines the technology strategy underpinning this growth, tying together infrastructure innovation, product development and AI-driven revenue expansion.

AWS sees year-on-year growth of 19%, cementing its position as the leading cloud platform.

Across the company, revenue climbs 11% to US$638bn with operating income jumping 86% to US$68.6bn.

But Andy dedicates much of his letter not to these headline figures, but to explaining how AI now plays a central role in Amazon’s long-term outlook.

AI revenue accelerates as Amazon builds new applications

According to Andy, Amazon’s “AI revenue is growing at triple-digit YoY percentages and represents a multi-billion-dollar annual revenue run rate.”

This growth stems from a broad application of Gen AI technology across Amazon’s portfolio.

More than 1,000 Gen AI applications are under development across various business units, from AWS and Alexa+ to the company’s ecommerce operations.

Andy argues that AI is set to reshape almost every area of customer interaction. “Generative AI is going to reinvent virtually every customer experience we know, and enable altogether new ones about which we’ve only fantasised,” he writes.

At the heart of this push is AWS, which Andy describes as responsible for building the “key primitives (or building blocks) for AI development.”

These include Amazon’s large language models, under the Nova brand, and custom silicon chips designed to optimise both the cost and performance of AI workloads.

Custom silicon and model efficiency take centre stage

Among the most prominent technologies in Amazon’s AI portfolio are its Trainium2 chips, which the company claims deliver “30-40% better price-performance than the current GPU-powered compute instances generally available today.”

These chips represent Amazon’s response to the growing cost of AI infrastructure and the industry's current reliance on Nvidia.

“AI does not have to be as expensive as it is today, and it won't be in the future. Chips are the biggest culprit. Most AI to date has been built on one chip provider. It's pricey,” Andy says, referring to the high costs associated with current AI chipsets.

Alongside hardware, Amazon is investing in the software layer, with an emphasis on improving efficiency across the AI lifecycle.

Training large models remains a considerable expense, but Andy points out that “inference will represent the overwhelming majority of future AI cost.”

He highlights ongoing efforts to enhance efficiency through model distillation, prompt caching and new model architectures.

These infrastructure advances are complemented by Amazon’s distinctive internal development processes.

The company has, since 2004, used written narratives instead of slide decks for meetings—a method Andy says helps teams to “highlight the key issues in enough detail to be crisp and clear.”

Alexa+ and Kuiper reflect broader technology ambitions

AI extends into Amazon’s consumer tech with Alexa+, the company’s enhanced virtual assistant.

Andy argues that this product marks a turning point in the market. “A great personal assistant can answer virtually any question and get things done on your behalf. There have been no digital solutions that can do both yet. That is, until Alexa+ arrived,” he writes.

With more than 600 million Alexa devices in circulation, Amazon has a ready-made ecosystem for deploying next-generation assistant capabilities.

This strengthens its foothold in the AI assistant space, where competition is heating up.

Beyond AI, Andy references other major technology projects, including Project Kuiper, Amazon’s initiative to expand internet access using a low Earth orbit satellite network.

“There are about 400-500 million households around the world, most in small, rural towns that don’t have access to broadband connectivity,” he says. The company has already begun launching production satellites and aims to deploy more than 3,200 in orbit.

Technology development, Andy argues, also benefits from physical collaboration.

As part of a broader shift in company policy, Amazon mandates a full return to the office from January 2025, ending the hybrid arrangements introduced during the pandemic.

While the policy faces pushback from some employees, Andy defends the decision on the basis of innovation outcomes.

“In my experience, it doesn’t compare to being in the same room. The energy, the pace, the spontaneous brainstorming, the willingness for people to jump in, the way ideas evolve in real time and the post-meeting iteration is much better when in the same room — and yields better outcomes for our customers and teams,” he writes.

The letter closes with a reflection on Amazon’s innovation philosophy and future-facing mindset.

“We operate like the world's largest start-up in large part because of our culture of Why. We don’t always get everything right, and we learn and iterate like crazy,” Andy concludes.

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