In a significant boost for Amazon, the tech giant’s most lucrative cloud business reported a notable upswing, driving a 7% surge in stock value on Friday. The surge comes as Amazon aggressively targets a larger share of the rapidly expanding artificial intelligence (AI) market, fiercely competing with industry frontrunner, Microsoft.
Amazon’s Q3 revenue surged by 13%, reaching $143.1 billion. Notably, Amazon Web Services (AWS), the company’s cloud platform, defied recent trends of slowing growth by recording a $23.1 billion revenue for the third quarter, marking a substantial 12% increase over the same period last year. Amazon continues to dominate the cloud computing sector with an impressive 32% market share, surpassing Microsoft Azure’s 22% and Google Cloud’s 11%.
However, Microsoft’s recent announcement regarding the 29% growth of its Azure cloud division for the third quarter compared to the previous year, with a significant three percentage points attributed directly to AI investments, should serve as a wake-up call for Amazon.
Amazon’s CEO, Andy Jassy, expressed confidence in the cloud business’s stabilization. He anticipates substantial growth in the final quarter of the year, attributing it to large expansions with existing clients and potential first-time agreements. Jassy also highlighted the immense potential of AI for Amazon Web Services, projecting “tens of billions of dollars in revenue over the next several years.”
How Amazon is chasing Microsoft in the AI race
Despite AWS’s commanding lead in overall market share, Microsoft’s attraction lies in its capacity to host artificial intelligence models on Azure. Microsoft already provides the fundamental computing power for widely-used products like the ChatGPT chatbot from OpenAI, a venture it has backed since 2019.
Amazon too is actively driving progress in this competitive race. The company recently unveiled Amazon Bedrock, a fully managed service offering a selection of high-performing foundation models (FMs) from leading AI sources.
Bedrock, available through a single API, provides a comprehensive suite of tools necessary for constructing generative AI applications, streamlining development without compromising privacy or security. Given its serverless nature, Bedrock eliminates the need for infrastructure management, enabling the seamless integration and deployment of generative AI capabilities using familiar AWS services.
Furthermore, Amazon has committed a substantial $4 billion investment in AI startup Anthropic, bolstering its position in the generative artificial intelligence domain.
Amazon is maintaining its stronghold in cloud computing and also aggressively pursuing a dominant position in the AI market, setting the stage for a dynamic competition with Microsoft. With both tech giants making substantial investments in AI, the future of this rapidly evolving industry promises to be both competitive and transformative.
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