Pro Perspectives 8/3/23






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August 03, 2023

We heard from two cloud giants last week, on Q2 earnings.  Microsoft had record revenues in the quarter.  Google beat on earnings and revenues. 

Today we heard from Amazon.  It was a big quarter.  They exceeded guidance on revenues and operating income.  

And similar to the earnings calls of Microsoft and Google, Amazon’s call was very focused on the generative AI opportunity.

Remember, this is the first quarter we’ve heard from the “big tech” oligopoly (in an earnings call), since Nvidia declared generative AI to be “the beginning of a major technology era” in its May earnings call.

So, what did CEO Andy Jassy have to say about it?   

Amazon is developing “Large Language Models-as-a-Service.”

It takes years and billions of dollars to build large language models (like ChatGPT).  They are enabling customers to apply already developed models to their own proprietary data, which is secured on AWS (Amazon’s cloud).

As he says, “the core of AI is data.  People want to bring generative AI models to the data, not the other way around.”  It’s the only way to keep their proprietary data secure (not leaked into the world).  

With this business, he says they are “democratizing access to generative AI.”

About this LLM-as-Service business they said it’s early, but they expect it to be “very large.”

So, we’ve heard from the top three cloud companies now.  And all of the calls were dominated by the AI opportunity, the new businesses, the investments they’re making, the new customers they’re reaching, and the expanding total addressable market in front of them.

It’s a new high growth business, where their competitive moats will grow only wider.

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