MarketWatch First Take: Amazon’s AI talk is making Wall Street drool, but there seems to be a catch

by | Oct 26, 2023 | Stock Market Inc. investors were willing to look past a soft holiday-quarter outlook once executives spent the bulk of the company’s earnings call talking up big opportunities in the cloud fueled in part by artificial-intelligence deals. But there seems to be a catch.

It’s easy to get carried away thinking about the potential in generative AI, which can unlock more tech spending by companies looking to jump on the bandwagon. Yet corporate customers are still trying to find their footing with the nascent technology, as they play around with potential applications and get a better sense of their costs and benefits. “The only certainty is that there will continue to be a high rate of change,” Amazon
Chief Executive Andy Jassy said on the company’s earnings call. “I think we are very early in generative AI….so many companies are doing all sorts of prototypes.” Jassy, who led Amazon’s AWS cloud-computing business before he got the CEO nod, noted that many customers test models, like large language models for AI, and then plug those into their own software applications. “And what a lot of companies figure out quickly is that using…the large models and the large sizes ends up often being more expensive than what they anticipated.” In other words, companies may be showing some interest in AI experimentation now, but they may not necessarily go through with all these projects over the long haul, or they could scale down the web services they purchase. Plus, revenue …

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