In the dynamic landscape of Artificial Intelligence (AI) equities, Amazon’s (NASDAQ: AMZN) stock trajectory has ascended dramatically, boasting an increase exceeding 40% in 2023. Yet, this surge pales in comparison to the apex contenders of the mega-cap domain, where Meta Platforms and Nvidia are engaged in a competitive tête-à-tête for supremacy.
This echelon of soaring stocks shares a pivotal commonality: their unwavering focus on AI. The prospective avenues for growth within this sector are colossal. Pinpointing the paramount victor among these giants is a formidable task, but Amazon emerges as a compelling candidate as the preeminent AI investment choice at present.
Envisioning the Olympus
In the realm of large language models (LLMs), OpenAI’s GPT-4 stands as the current zenith, boasting a staggering 1.76 trillion parameters. These parameters are the vital cogs in the transformation of input data into meaningful output. A higher parameter count typically signifies enhanced capability, although this is not a definitive measure of performance.
Earlier this year, Amazon unveiled its own LLM, Titan, though it has not yet achieved parity with GPT-4. Nevertheless, Amazon is advancing with vigor in its AI endeavors. As per recent reports by Reuters, Amazon is ardently cultivating a new AI model, codenamed “Olympus,” which purportedly houses approximately 2 trillion parameters. While this numerical advantage doesn’t guarantee Olympus’ superiority over GPT-4, it positions it as a formidable contender in the AI arena.
Amazon’s Distinct Edge
While OpenAI and others like Alphabet’s Google, rumored to be developing the potent Gemini model, are not idle in their pursuits, Amazon possesses a strategic edge. Amazon CEO Andy Jassy, in the third-quarter earnings call, highlighted a pivotal trend: customers’ preference to bring models to their data, predominantly housed in Amazon Web Services (AWS), the undisputed leader in cloud infrastructure.
AWS’s approach involves offering a suite of LLMs through its Amazon Bedrock platform, including offerings from third parties like AI21, Anthropic, Cohere, and Stability AI, as well as Meta’s Llama 2 and Amazon’s Titan. The introduction of Olympus could significantly amplify AWS’s allure to its clientele.
Furthermore, Amazon plans to integrate Olympus into various other domains. For instance, its CodeWhisperer generative AI coding tool could gain augmented capabilities. Jassy underscored that all of Amazon’s major businesses are harnessing generative AI to revolutionize customer experiences, a transformation Olympus could significantly enhance.
Beyond the AI Spectrum
However, Amazon’s potential as the premier AI stock isn’t solely anchored in AI. The company’s expansion into novel markets is noteworthy. For example, Jassy announced Amazon’s venture into the online car sales market in the U.S., starting in 2024 with Hyundai, and potentially extending to other brands. Additionally, Amazon debuted a new service, Supply Chain by Amazon, in September, leveraging its extensive supply chain network to benefit external clients.
Moreover, Amazon’s profits have seen a threefold increase year-over-year in Q3, indicative of successful streamlining initiatives. Although Nvidia’s recent earnings growth outstrips Amazon’s, the sustainability of this growth, especially as the GPU supply-demand imbalance stabilizes, remains uncertain.
In summary, Amazon’s multi-faceted approach, encompassing robust AI development and diversification into new ventures, positions it as a potentially lucrative AI stock investment, surpassing the conventional AI-centric narrative.
