Amazon CEO Andy Jassy expressed confidence that artificial intelligence costs will decline over time, even as the company continues to invest heavily in the technology. In his annual letter to shareholders released Thursday, Jassy highlighted several factors that will contribute to making AI more affordable in the future.
“AI does not have to be as expensive as it is today, and it won’t be in the future,” Jassy wrote, pointing to more price competitive chips and improvements in “model distillation, prompt catching, computing infrastructure, and model architectures” as developments that will eventually reduce the “cost per unit in AI.”
The Amazon chief drew parallels to the company’s cloud computing business, which helped lower compute and storage costs, ultimately leading to “more invention, better customer experiences, and more absolute infrastructure spend.”
Amazon has allocated up to $100 billion for capital expenditures this year, with the majority directed toward AI-related projects. The company has been rapidly investing in data centers, networking equipment, and hardware to meet the growing demand for generative AI following the popularity of OpenAI’s ChatGPT.
As part of its AI strategy, Amazon has introduced a range of products including its Nova models, Trainium chips, a shopping chatbot, and Bedrock, a marketplace for third-party models. The company has also updated its Alexa digital assistant with generative AI capabilities.
Since becoming CEO in 2021, Jassy has focused on streamlining Amazon’s operations and controlling costs while still investing strategically. The company laid off more than 27,000 employees in 2022 and 2023, with additional smaller rounds of job cuts continuing into this year. Amazon has also scaled back some experimental initiatives such as its “Try Before You Buy” clothing service and a TikTok-like video feed.
Jassy emphasized that Amazon must maintain its startup mentality, operating without bureaucracy, remaining “scrappy,” and continuing to take risks. Last September, as part of a return-to-work mandate, he announced plans to simplify Amazon’s corporate structure, aiming to increase the ratio of individual contributors to managers by 15% by the end of Q1 2024.
To combat bureaucracy, Jassy created a “bureaucracy mailbox” that has received nearly 1,000 employee emails identifying red tape issues. “Builders hate bureaucracy,” Jassy wrote. “It slows them down, frustrates them, and keeps them from doing what they came here to do.” The company has already implemented over 375 changes based on this feedback.
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