Unless you've been living under a rock, you've heard all about artificial intelligence (AI) and how it's going to change your life. You've probably already tried ChatGPT, like millions of other people, either just for fun or to help you with your work.
You might have also invested in some AI stocks. If you haven't yet or if you're considering another one, you might want to invest in Amazon (AMZN 1.62%). Here's why.
The best at everything?
Amazon doesn't ever seem to be satisfied with where it is. It's the top e-commerce stock by far, with about 38% of the market. For comparison, second-place Walmart has around 6%, and it only goes down from there. It's still only the second-largest company in the U.S. by sales though, behind Walmart.
It's also the largest cloud computing services provider, with 32% of the market for Amazon Web Services (AWS) versus 23% for Microsoft and 10% for Alphabet. That's not quite as wide of a gap although it's substantial.
There's a mix of ways Amazon gets to the top of most of what it touches (although not all). The first part is that it's not afraid to get into all sorts of industries, and it goes in thinking about how it can be better. Much of how it has made its services better than others lies on the foundation of AI.
The age of generative AI
Previously, Amazon used AI and machine learning for functions like product recommendations and inventory management. It also uses it for practical considerations like the fastest and cheapest modes of fulfillment and delivery. With Amazon's years of data through probably billions of purchases, these are powerful tools that generate higher sales, efficiency, and customers satisfaction.
Recent technological developments have changed generative AI from what was lackluster performance to incredible results, which resulted in the explosion of ChatGPT and similar tools when they were introduced a few months ago. Never one to sit out what could be a lucrative opportunity, Amazon has entered the generative AI ring as well.
In April, management announced that it was launching generative AI capabilities for AWS, and they have significant far-reaching consequences that will change how programmers work. The effort is underpinned by technology called Amazon Bedrock. Amazon Bedrock is a foundation model (FM), or a large-language model, that is so developed from machine learning and myriad data points that it can provide truly productive and reliable generative AI tasks.
Amazon is making the FM available to AWS customers through an API, which means developers can integrate it seamlessly into their own digital technology.
Management gave the example of a handbag retailer who needs fresh copy for an ad campaign for new products. The company can input previously used tag lines and product descriptions into Bedrock, and the system will provide a full social media campaign, web copy, and more. What's different here is that unlike most machine learning, the data that the system uses hasn't been trained on points from this handbag company, yet it can use other data to generate output.
Another service Amazon launched is called Code Whisperer. This service lets developers give a prompt for what code they want to develop, and the system provides the code.
Both of these tools use technology similar to AutoGPT, a next-level tool that works with ChatGPT. Users provide it with an overarching goal, and the technology self-generates the prompts necessary for each step of attaining that goal. It's even more humanlike than ChatGPT, and it can learn and improve as it generates results.
What's happening next?
As revolutionary as these tools are, they may be just the beginning. Amazon said it has a lot more coming for AWS developers using generative AI.
AWS is posting its lowest growth rates ever, with sales increasing 16% in the 2023 first quarter. The company is using this time, when clients are rethinking their plans as inflation crunches their operations, to offer better services. This puts it in a great place to win over new customers who may be looking for cheaper plans as well as keep its current customers and get more business when the economy shapes up.
Amazon stock is up 54% so far this year, and investors should expect continued upward movement as it innovates with new technology and dominates new fields.
