Amazon (AMZN 1.90%) is a top player in the two high-growth markets of e-commerce and cloud computing, and they've helped the company generate billions of dollars in annual earnings. They've also attracted investors, pushing Amazon's market value beyond $1 trillion. Considering the company's dominance in the e-commerce and cloud areas, you can expect them to be central to the next chapters of the Amazon story.

And now, Amazon is using a tool that could boost its performance in both businesses: artificial intelligence (AI). The company has applied AI across businesses, to make operations easier and cost efficient -- and is offering the advantages of AI to its customers, too. Could this exciting technology become Amazon's next growth driver? Seven words from CEO officer Andy Jassy answer the question.

A 3D human bust is shown with computer code written over it.

Image source: Getty Images.

Amazon and artificial intelligence

First, a little background on Amazon and its relationship with AI. The company isn't new to the technology, and if you're an Amazon customer, you might have even benefited from it when you've shopped on the platform. Through AI, Amazon is able to offer you ideas of what to buy tailored to your tastes, for example. The company also uses AI to power its virtual assistant, Alexa. And the technology helps Amazon more efficiently manage inventory and transport packages.

Now, let's get to the seven words pronounced by Jassy in last week's earnings call. Jassy spoke specifically about generative AI, which involves training models so they actually can go on to create new content. The generative AI opportunity for Amazon Web Services (AWS) will equal "tens of billions of dollars of revenue," Jassy predicted.

AWS is Amazon's cloud computing business -- and the unit that generally has driven profit at the company, making up about 60% of operating income in recent years. The business also represents a huge chunk of sales, last year generating more than $80 billion. Amazon reported $514 billion in total sales.

Jassy's AI plans

Jassy said AWS is investing in AI at three levels with the idea of serving all of its clients' AI needs. First, the company is working on the Trainium and Inferentia chips, which power the training and inference abilities of large language models.

Second, AWS offers companies the opportunity to use existing large language models and customize them for their own purposes -- without having to manage infrastructure. This is through the Amazon Bedrock service.

Finally, AWS also is involved in the applications that run large language models through its creation of CodeWhisperer. The AI coding companion offers code recommendations based on a company's existing code -- so using it is like taking recommendations from a senior engineer who knows the company's code base very well.

For the full year, Amazon's capital investments are set to total about $50 billion, down from $59 billion last year. But, within that total, the company is increasing its investment in AI and general AWS infrastructure.

When will Amazon's AI investment pay off?

So, now, a reasonable question is: When will this investment start paying off for Amazon and for investors? The company has offered us a few clues. The billions of dollars in revenue Jassy refers to should roll in over "the next several years."

Amazon also says its leadership in cloud should help it dominate in AI -- because companies want to bring models to their data, and since this data is stored with AWS, it's easy to use the AI services that are so readily available.

It's also important to remember AWS margins are much higher than Amazon's e-commerce margins, so the company could greatly profit from developing AI services within its cloud business. In the most recent quarter, AWS operating margin as a percentage of AWS net sales was more than 30%. That's compared to an operating margin of 4.9% for the North American e-commerce business.

So, you can deduce this from Jassy's comment: AI could indeed become Amazon's next growth driver. Of course, since AI still is in its early days, results may not happen overnight -- but there could be a lot to gain down the road. Amazon's investments and progress so far mean it could become an AI winner over time, and that's great news for investors in this trillion-dollar stock.