Amazon CEO Andy Jassy unleashed a meticulous 8-minute defense of AWS’ standing in the AI arms race amid investor stock freakout

·AmazonAmazon CEO Andy Jassy unleashed a meticulous 8-minute defense of AWS’ standing in the AI arms race amid investor stock freakoutBy Jason Del ReyBy Jason Del Rey CorrespondentJason Del Rey CorrespondentJason Del Rey is a nology correspondent at Fortune and a co-chair of the Fortune Brainstorm and Fortune Brainstorm AI conferences.SEE FULL BIO Despite solid results, Amazon and CEO Andy Jassy have not convinced investors that AWS' AI playbook is a great one.Amazon’s stock price had already been dropping in after-hours trading on Thursday despite better-than-expected results when Morgan Stanley analyst Brian Nowak prefaced his questions on an earnings call with a disclaimer that made it this wasn’t going to be a “Congrats on the quarter, guys” type of analyst—CEO interaction. “I have two [questions] for you on AWS; they’re a little tough but I’m going to throw them at you,” Nowak told Amazon CEO Andy Jassy. “There is a Wall Street finance person narrative right now that AWS is falling behind in Gen AI with concerns loss to peers

What is your rebuttal to that and talk to us your and the team’s most important focal points just to ensure that AWS stays on the knife’s edge of innovation versus hyperscaler peers?” Nowak also pressed Jassy on why it wouldn’t be fair to assume that AWS’ revenue growth shouldn’t accelerate in the back half of the year given all of AWS’ generative AI offerings and widespread demand from companies of all sizes to cash in on this transformational nology

Jassy responded by stressing that this is the early stages of a nological transformation that will extend far into the future

While some of the top frontier model viders do use AWS in some capacity, non-AI AWS customers that are rushing to build generative and agentic AI services using AWS are “quite early, and many of them are just smaller in terms of usage relative to some of those top heavy applications I mentioned earlier.” That is bound to change

So if you Jassy’s thinking, as more enterprises figure out what they want to build and how they want to build it, they’re going to start having different needs

For the largest model makers, Open AI or Anthropic, Jassy foresees their costs shifting from a mix between training their models and the cost associated with “inference,” or the customer-facing part where the model spits out a prediction, answer or action, to mostly inference expenses

And Jassy maintains AWS is positioned well for this transition because of the low-cost AI chip line Trainium. “It’s 30% and 40% better price performance than the other GPU viders out there right now, and we’re already working on our third version,” he said

For others, who want to use another company’s model to create their own generative AI applications, Jassy argued that Amazon Bedrock, which offers models from a wide selection of companies, has become a go-to destination and “is growing very substantially.” Jassy continued on the this-is-just-the-first-inning thread, by noting that companies are just starting to think deploying AI agents and that, with its recent agentic AI announcements, AWS will be well-positioned to capitalize

The Amazon CEO, and former AWS chief, added that AWS cloud leadership position also vides some lock-in as AI “inference” becomes just another component of a company’s cloud services stack. “[P]eople are going to actually want to run those [AI] applications close to where their other applications are running, where their data is,” Jassy said. “There’s just so many more applications and data running in AWS than anywhere else.” As for Nowak’s question the possibility of AWS’ growth rate accelerating in the back half of the year, Jassy wouldn’t directly answer it but stressed his optimism, in part stemming from more AWS starting to deploy more AI ducts at sale that should continue to ramp in coming quarters

Azure generates around 2/3 the revenue that AWS does, while Google Cloud registers less than half the annual revenue of Amazon’s cloud behemoth. “You look at the , it’s a $123 billion annual revenue run rate and it’s still early,” he said. “How often do you have an opportunity that’s $123 billion in annual revenue run rate where you say it’s still early? It’s a very unusual opportunity that we’ve very bullish .” Introducing the 2025 Fortune 500, the definitive ranking of the biggest companies in America

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