Amazon is ‘investing heavily’ in the technology behind ChatGPT

Amazon wants investors to know it won’t be left behind in the latest Big Tech arms race over artificial intelligence.

In a letter to shareholders Thursday, Amazon (AMZN) CEO Andy Jassy said the company is “investing heavily” in large language models (LLMs) and generative AI, the same technology that underpins ChatGPT and other similar AI chatbots.

“We have been working on our own LLMs for a while now, believe it will transform and improve virtually every customer experience, and will continue to invest substantially in these models across all of our consumer, seller, brand, and creator experiences,” Jassy wrote in his letter to shareholders.The remarks, which were part of Jassy’s second annual letter to shareholder since taking over as CEO, hint at the pressure that many tech companies feel to explain how they can tap into the rapidly evolving marketplace for AI products. Since ChatGPT was released to the public in late November, Google (GOOG), Facebook (FB) and Microsoft (MSFT) have all talked up their growing focus on generative AI technology, which can create compelling essays, stories and visuals in response to user prompts.

Amazon’s goal, according to Jassy, is to offer less costly machine learning chips so that “small and large companies can afford to train and run their LLMs in production.” Large language models are trained on vast troves of data in order to generate responses to user prompts.

“Most companies want to use these large language models, but the really good ones take billions of dollars to train and many years, most companies don’t want to go through that,” Jassy said in an interview with CNBC on Thursday morning. “What they want to do is they want to work off of a foundational model that’s big and great already, and then have the ability to customize it for their own purposes,” Jassy told CNBC.

In the letter, Jassy also reflected on leading Amazon through “one of the harder macroeconomic years in recent memory,” as the e-commerce giant cut some 27,000 jobs as part of a major bid to rein in costs in recent months.

“There were an unusual number of simultaneous challenges this past year,” Jassy said in the letter, before outlining steps Amazon took to rethink certain free shipping options, abandon some of its physical store concepts and significantly reduce overall headcount.

Amazon disclosed in a securities filing Thursday that Jassy’s pay package last year was valued at some $1.3 million, and that the CEO did not receive any new stock awards in 2022. (When Jassy took over as CEO in 2021, he was awarded a pay package mostly comprised of stock awards that valued his total compensation package at some $212 million.)

Despite the challenges at Amazon, however, Jassy said in his letter that he finds himself “optimistic and energized by what lies ahead.” Jassy added: “I strongly believe that our best days are in front of us.”

With that in mind, Amazon on Thursday unveiled a new service called Bedrock. It essentially makes foundation models (large models that are pre-trained on vast amounts of data) from AI21 Labs, Anthropic, Stability AI and Amazon accessible to clients via an API, Amazon said in a blog post.

Jassy told CNBC he thinks Bedrock “will change the game for people.”

In his letter to shareholders, Jassy also touted AWS’s CodeWhisperer, another AI-powered tool which he said “revolutionizes developer productivity by generating code suggestions in real time.”

“I could write an entire letter on LLMs and Generative AI as I think they will be that transformative, but I’ll leave that for a future letter,” Jassy wrote. “Let’s just say that LLMs and Generative AI are going to be a big deal for customers, our shareholders, and Amazon.”