The World Economic Forum is underway in Davos, Switzerland, and many prominent government and business leaders are in attendance, including Amazon's (AMZN 0.91%) CEO Andy Jassy. Fortune magazine's Alan Murray was at the conference as well and took the opportunity to speak with Jassy and ask him about business trends, specifically the top opportunity and the top challenge for the coming year.
According to Jassy, the opportunity and the challenge involve the same thing: generative artificial intelligence (AI).
NASDAQ: AMZN
Key Data Points
Generative AI helps computers to create things on their own with just a prompt from the user. It could be creative content meant to be consumed, such as a written document or an original image. Or it could be something with more utility, such as a computer program. Hundreds of companies are working on all of this and/or working with all this right now.
The biggest challenge these companies will face comes down to priorities, according to Jassy. This is a fast-changing space, and businesses don't always know how to best spend money. "Are they better off continuing with the modernization of their technology platform?" Jassy asked. "Or should they put all their engineering resources into generative AI?"
A generative AI strategy requires both an approach to platform modernization and engineering resources. And this is why a stock to watch when it comes to generative AI is none other than Amazon itself.
How Amazon stock is leading the charge
While Amazon is a massive e-commerce operation, 74% of its profit comes from Amazon Web Services (AWS) -- its cloud computing platform. And with this platform, businesses using it can execute a generative AI strategy.
It starts with using Amazon's AWS for the computing power itself and also utilizing the more than 60 generative AI applications that Amazon is reportedly building on its own. Moreover, the company offers a service called Bedrock, which allows businesses to build their own generative AI apps as well.
Huge companies such as Booking Holdings, GoDaddy, and United Airlines all already use Amazon's AWS for their generative AI strategies.
With only 12% growth in the third quarter of 2023, growth for Amazon's AWS has slowed recently. However, the company has remaining performance obligations of $133 billion, and most of this has to do with AWS. This clearly shows that Amazon stock is leading the charge in this important space.
