Amazon CEO Andy Jassy predicts AI costs will drop as technology advances
In his annual shareholder letter released Thursday, Amazon CEO Andy Jassy forecasted that rapid advancements in artificial intelligence, coupled with a more competitive chip market, will drive down the current high costs associated with AI.
“AI does not have to be as expensive as it is today, and it won’t be in the future,” Jassy wrote, News.Az reports, citing CNBC.
Jassy said more price-performant chips, along with improvements in “model distillation, prompt catching, computing infrastructure, and model architectures” will over time reduce the “cost per unit in AI,” which will “unleash AI being used as expansively as customers desire.”
He likened it to the company’s cloud juggernaut, which brought down the cost of compute and storage, leading to “more invention, better customer experiences, and more absolute infrastructure spend.”
Amazon has earmarked up to $100 billion this year on capital expenditures, with the lion’s share going to AI-related projects. The company has been rushing to invest in data centers, networking gear and hardware to meet vast demand for generative AI, which has exploded in popularity since OpenAI released its ChatGPT assistant in late 2022. Amazon has introduced a flurry of AI products, including its own set of Nova models, Trainium chips, a shopping chatbot, and a marketplace for third-party models called Bedrock. It also overhauled its decade-old Alexa digital assistant with generative AI features.
Jassy, who became CEO in 2021 when founder Jeff Bezos stepped down, has sought to streamline the company’s vast business footprint and bring costs in check, at the same time that he’s deepened investments in some areas.
The company laid off more than 27,000 employees in 2022 and 2023. It had smaller rounds of job cuts in 2024 that are stretching into this year. The company has also continued to wind down some of its more experimental or unprofitable initiatives, such as a “Try Before You Buy” clothing service, a TikTok-like video feed and a speedy brick-and-mortar delivery program.
Jassy said Amazon must continue to operate like the “world’s largest startup” that moves quickly without bureaucracy, is “scrappy” and is willing to take risks.
Last September, as part of a broader return-to-work mandate, Jassy said Amazon would simplify its corporate structure. He set a goal to increase the ratio of individual contributors to managers by 15% by the end of this year’s first quarter.
As part of that, Jassy also created a “bureaucracy mailbox.” He said on Thursday that he’s received almost 1,000 emails from employees describing bureaucracy examples, and the company has made more than 375 changes based on that feedback.
“Builders hate bureaucracy,” Jassy wrote. “It slows them down, frustrates them, and keeps them from doing what they came here to do. As leaders, we don’t always see the red tape buried deep in our organizations, but we can sure as heck eliminate it when we do. We’ve already made over 375 changes based on this feedback.”
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