Global Vice President of Amazon Cloud: Generative AI is in the hype cycle and has not yet reached its peak

Source: The Paper

Reporter Shao Wen

“I don’t think we can deny that the dot-com bubble existed, but it did change everyone’s life, and we can’t imagine life without the internet now. I believe generative AI will change every job, every industry. every business. It will take time.”

Image source: Generated by Unbounded AI tool

Under the boom of generative AI, there are seven major technology stocks in the U.S. stock market this year that have attracted much attention. They are Amazon (AMZN), Apple (AAPL), Nvidia (NVDA), Tesla (TSLA), Alphabet (GOOGL), Microsoft (MSFT) and Meta (META). These seven stocks are off to an excellent start to 2023, averaging roughly 88% gains.

According to statistics from the US financial media Business Insider, the total market value of these seven technology stocks has soared 60% this year, or 4.1 trillion US dollars, to 11 trillion US dollars. That’s almost three times the size of the German economy. According to the World Bank, the German economy will be worth just over $4 trillion by the end of 2022.

Among them, Amazon is the most popular stock on Wall Street, with 91% of analysts giving its stock a “buy” or equivalent rating. The average buy rating for an S&P 500 stock is around 55%.

Is the current extreme enthusiasm for generative AI a bubble? Vasi Philomin, Global Vice President of Generative AI at Amazon Cloud Technology, responded to The Paper (reporter), "I don’t think we can deny that the Internet bubble once existed, but it did change everyone’s life. It is already impossible to imagine life without the internet. I believe generative AI will transform every profession, every business in every industry. It will take time.”

Gartner Hype Cycle (also known as the “Hype Cycle”) chart.

Ferromin directly asked the question that the reporter wanted to ask: Are we in a Hype Cycle now? And answer straight to the point: “Yes. If you look at the technology hype cycle (also known as the ‘hype cycle’) chart published by consulting firm Gartner, I think you should be familiar with it. We may not have reached the top yet, and there will definitely be some More hype. But at the same time, there are a lot of people quietly building useful things behind the scenes, and they are implementing real business use cases behind the scenes.”

Philomin believes that when all the hype dies down and the Hype Cycle starts to flatten and take off again, the companies that will survive will be those that want to think business-wise and enable all customers to actually build applications , which is the direction they want.

According to the latest data released by Gartner, the global infrastructure services market will grow by 29.7% in 2022, reaching a total of 120.3 billion US dollars. Among them, Amazon continues to lead the global IaaS (Infrastructure as a Service) market with a revenue of US$48.1 billion and a 40% market share, while Microsoft ranks second with a 21.5% share. In fact, the challenge of No. 2 (Microsoft) to No. 1 (Amazon) has been a hot topic because of Microsoft’s strategic investment in OpenAI and its active involvement in generative AI many years ago.

Wall Street analyst Rob Sanderson (Rob Sanderson) believes that “as the excitement around generative artificial intelligence has been concentrated on Microsoft and Google, many investors question whether AWS is at a disadvantage.” It will quickly be recognized that AI will drive a meaningful expansion in demand for the cloud, and AWS will be a major player."

But not all analysts are bullish on Amazon’s cloud growth. Competition between Amazon and Microsoft cloud services is exciting, Itau BBA analyst Thiago Alves Kapulskis wrote in a research note after Amazon’s first-quarter earnings report. worry. “With so much uncertainty around Amazon and the significant differences between Azure (Microsoft cloud) and AWS, we believe the market will favor the former and its parent company over the latter,” the analyst wrote.

Ferromin didn’t shy away from the question in the interview. Regarding the reporter’s mention of Microsoft’s latest quarterly financial report, he mentioned that a core issue lies in the source of income. From this perspective, there are differences in the business models of the two companies-Microsoft’s core business may be office products that improve productivity, while AWS It is a B2B (business-to-business) enterprise that provides cloud services for enterprises.

“Our focus is on enterprises. What we provide is not productivity applications, but tools. Our customers can apply these tools to their own business workflow.” Filomin said that the business models of the two are not the same, “If people use AWS services, it’s pay-per-call. It’s the very traditional AWS way, where you only pay for what you use. It’s not like the office suite or the Microsoft way.”