Amazon (AMZN 0.16%) is the latest tech giant to jump into the artificial intelligence (AI) arms race with Bedrock, a cloud-based platform that's going to help customers build generative AI applications such as chatbots, image and text generators, and customized search engines, among others.
It is worth noting that Amazon won't be building and offering an exclusive AI model of its own. Instead, the company's Amazon Web Services (AWS) platform will offer generative AI models from third parties such as Stability AI, Anthropic, and AI21 Labs. Bedrock will also offer Amazon's in-house AI platform known as Titan, which can generate text based on user inputs (akin to OpenAI's ChatGPT) and translate text inputs into a numerical format.
This approach is different from what the likes of Alphabet and Microsoft have been following, and it could pay off big time for Amazon. Let's look at the reasons why.
Amazon's generative AI move is a shrewd one
While Microsoft has enjoyed a head start in the generative AI market through its investment in OpenAI, the developer of the massively popular chatbot ChatGPT, Alphabet has made a somewhat shaky entry into the chatbot space with Bard. ChatGPT has quickly built a massive user base, clocking 1 million users within a week of launch and hitting 100 million monthly users in just two months.
Microsoft and OpenAI are now pushing the envelope in generative AI by deploying the technology into more applications such as the Bing search engine and the Microsoft 365 productivity and collaboration tool. The software giant has also launched a cloud service that will help enterprises integrate OpenAI's algorithm into their services and build custom applications based on their needs.
Bard, on the other hand, made an error when Alphabet demonstrated the chatbot, causing Alphabet's stock to plunge. However, Alphabet is now working on improving Bard, though it remains in a pilot phase and is available only in the U.S. and the U.K. for initial testing purposes before a broader rollout.
It may look like Amazon is late to the game compared to Microsoft and Alphabet, but there is more than what meets the eye. Through Bedrock, Amazon isn't just offering access to its proprietary large language model (LLM) Titan, but also to third-party platforms as listed above. This could make Amazon the go-to platform for enterprises looking to use LLMs and build applications according to their needs.
Bedrock seems to be gaining traction already
Amazon CEO Andy Jassy told CNBC in an interview that several companies wish to use LLMs, but the massive investment and time required to train these models acts as barrier to entry. Jassy points out that Bedrock is giving those companies looking to develop generative AI applications a suite of foundation models to work with, which should ideally help reduce the costs involved and the time that's taken to develop such applications.
Amazon hasn't revealed the pricing of Bedrock yet, but it looks like the platform is witnessing early demand from some leading names. According to a blog post by Swami Sivasubramanian, the vice president of data and machine learning at AWS: "[O]ur partners like Accenture, Deloitte, Infosys, and Slalom are building practices to help enterprises go faster with generative AI. Independent Software Vendors (ISVs) like C3.ai and Pegasystems are excited to leverage Bedrock for easy access to its great selection of FMs with all of the security, privacy, and reliability they expect from AWS."
It won't be surprising to see more companies flock toward Bedrock as the service offers multiple generative AI models on a single platform. Stability AI's Stable Diffusion, for instance, is an image generator that turns text into images. AI21 Labs' Jurassic-2 model, on the other hand, is a multilingual LLM that can generate text in German, Spanish, French, Portuguese, Dutch, and Italian. Anthropic's Claude is a ChatGPT rival that can automate workflows, answer questions, and converse with users.
And, if Amazon brings more LLM providers into its fold, it could become the one-stop shop for companies looking to develop generative AI applications. This could set Amazon up to benefit big time from the generative AI market that's expected to clock almost 35% annual growth through 2030 and reach $110 billion in annual revenue at the end of the forecast period, according to Grand View Research.
So, Amazon's foray into the generative AI space could give its growth a big boost in the long run, giving investors yet another reason to buy this tech stock that's already sitting on some notable catalysts.
