Bloomberg Audio Studios, podcasts, radio news. We now want to welcome to our TV and radio audiences worldwide. Amazon's president and CEO, Andy Jesse, Great to have you.
On New York. Thanks for having me. It's great to be here.
Back home where you grew up at and you are unveiling generative AI infused Alexa Plus. How is this going to really well excite your customer base? What are you most excited for it?
Well, you know we've had Alex has been around for ten years. We have six hundred million devices in customers homes and offices, and Alexa Plus is our next generation Alexa Personal Assistant, and she's meaningfully smarter and more capable and useful than her prior self. You can do all the things that you used to do, but every single one of those functions is better. And I can give
you just an example. There are so many examples, but you know, if you have smart home controls with Alexa now, you can say, Hey, Alexa, I have guests coming over at seven pm. Could you raise the drapes, could you raise the temperature by five degrees, turn on the porch lights and the driveway lights, and put on melo dinner music in the dining room and music you're not me. I choose shop Fighters, but most people will choose Melo dining music. But you can do that all verbally and
simply using conversational language like that. You don't need a nap. It just happens. And so Alexa plus, with what we've just announced and what we're launching, it really is. There have been a lot of chatbots around that are good at answering questions, but they don't take actions. Alexi plus is really Alexa is going to be the first one that not only is highly intelligent to answer various questions,
but she can do so many things for you. She can play music and play video, and control your smart home and make reservations for you and hire people to fix your oven. I mean, it really is the first big, large scale practical use of gen AI. The consumers are going to be able to see and use naturally.
I can see how you're going to obsess over it, whether it's ordering the latest Buffalo Wings or in New York and seeing where the best space is.
To do that.
But how are your stakeholders of shareholder based going to obsess about this? About gender to AI in Alexi Plus. How is that adding value for them?
Well, you know, I think if you think about what Alexa allows customers to do, it makes shopping more easy because it's so much more intuitive now to buy products. It makes enjoying music easier, It makes enjoying video and streaming media better. It allows you to control your smart home in a different way. So every single one of our consumer customer experiences gets better with Alexa Plus. And then you know, of course, Alexa has its own business model.
We have a brand new lineup of devices that are coming in the fall. I think that are beautiful. I think people are going to really like we have opportunities to service new products and advertising in various interfaces like our mobile and our desk top interface that's coming in Alexa. And then we have subscriptions, and you know, so I think there's a sustainable business model there as well.
Talk to me about the subscriptions because you're getting it free.
If you've got.
Prime, I get a lot with Prime. Now are you able to increase the prices there?
Do you think of Prime? Well, Prime is an incredible value. If you think about getting free shipping on three hundred million plus items. You know when we launch Prime, it's free shipping on about a million items to say, it's three hundred million items. And most of the time you're
getting your products now inside of a day. And so you know, between that and what you get with Prime Video and Prime Music and the grocery subscription, and you know our unique selling events, primes and incredible values increase to add on top of it Alexa plus. You know, it's just great value. So what do they plan right now? But it's I do think Prime is unusual value and it's why people use it so expansively.
And to increase that use has been this invention, this innovation of generative and that costs money. And you've actually just took to the stage yesterday to say, out of all companies, you are spending the most on AI. How much are you spending on AI?
Well, you know, I think we don't disclose the exact amount, but you know we you know, we're spending a pretty significant amount of cappax and the allion's share of it is on generative AI. We've said in our aws business even though general AI for US is a many billion dollars a year business and growing triple digit percentages year over year, that if we had even more capacity, we
could use it to monetize it. And we have this really interesting and very fortunate flywheel and AI inside of Amazon, which is if your mission is to make customers' lives easier and better every day, which it is for us, and if you believe that all the customer experiences we know of today are going to be reinvented through generative AI, which we also believe. You believe those two things, you're going to be building a lot of genera ABAI apps.
If you build a lot of gener of aif, by the way, other companies are too on top of AWS, which is the leading technology infrastructure platform. So if there are a lot of gener of AI apps being built on top of you, you can't help but get a lot of feedback from people on how they want those
building blocks that create gener AI to be better. And if you're willing to invest in those building blocks, which we are, as you know, with our own chips with Tradium and with our own frontier model with Amazon Nova and model building services and stage Maker AI and betterck.
If you're willing to invest in those building blocks and you're getting a lot of feedback, they get better much more quickly, which can't help them make it easier and quicker for people to build gender AI applications, which means you get more running on the platform. So that flywheel is very unique for Amazon.
The line share, though, you did say basically one hundred billion dollar run rate for CAPEX expenditure. Can you give us even like a percentage ratedown of how much that goes to distribution logistics and how much goes to AI line shares?
You know, you can tell you most of it. You know most of it. You know the line shares.
More than fifty Yes, is it more than eighty percent?
We're playing the warmer and colder game? Yes, exactly.
I love a game taught us about that capacity that you talked about. Yeah, AWS could grow even faster if you had all the chips that you needed, all the power you needed, the motherboards you needed. How much faster could a WS grow?
I could. It's hard to put an exact percentage, but I do think it could be growing faster. I'm confident could be growing faster. And you know there's there is you know, for a long time, there still aren't as many chips as we all want we have. We're fortunate
in that we're very big partners with Video. But then we also have our own custom AI silicon in tradium too, which we just released in Reinvent, which is thirty to forty percent more price performance than the GPU powered instances, which is a big deal at scale if you're doing gender of AI on the inference side. So we have maybe more chips than some others might have access to, but we still don't have enough. And then there's just is not enough power in the world right now, and
we're all working really hard on that. I expect that to relieve some the second half of this year, but right now, and you know, the world can change, but right now we have just insatiable demand.
We had amazing demand coming from Jensen Wang who had his numbers out yesterday and Nvidio. Was there a limitation on the in video chips in particular that pulled back capacity And at what point do you think can depend even more on your own in house built chips offset any of that?
Well, you know, I would say, I mean there's a lot of demand for gener Ai right now. People are very excited about it. I think that all the different providers of chips have been constrained to some extent. I think some of the some of the new generations maybe have gone through different evolutions and when they're going to be released maybe a little later than people thought. There are some components like motherboards and things like that that we all use that particular ones that are in shorter
supply than others. So you know, I do think there's some there are some supply chainges choose which I expect to get better. I do you know people are very excited about trainingum Too to your question and whether we could see more demand there, and we have gone back at least a couple occasions to make more trainingum Too than we'd intended because we have so much demand. So I expect the will of customers for as long as I can foresee wanting to run compute on instances that
have in vidio chips. But I think a lot of the demand will also be served by training the.
Customers that you couldn't serve because of the limited capacity. Is it that you just have to put it back from everyone a little bit more generally or who lost out here?
Do you think it's always a combination. I mean, there's for people that just have a very small amount of accelerators that they need. They don't usually have a problem. We have something called capacity blocks. It's kind of like an on demand way to use accelerators and and generate e chips and that continues to go. It's really the folks who have built, you know, have an idea for a new application, but they need a lot of chips.
Where if we don't have the capacity, we have to you know, we have to give them what we can give them and give it to them as fast as we can and push our partners to get it in sooner. And they can't get their initiatives done as quickly as they want to if the capacity isn't there.
Andthropics had all the capacity it needs, you've got on a close relationship.
Yeah, we have a very close partnership with Anthropic. We have this project called Project right near with them. They're building their next model, their next version of their frontier model on top of trainum to and our custom AI silicon. They're going to use over four hundred thousand trainum two chips and so yes, they have capacity. They're they're ramping up and we're excited about that partnership and what they're building.
You mentioned the power side. How much is that something you're talking to the administration about. How much is the administration supportive of the buildout that you need to do.
We have been talking to administration, you know, multiple administrations in this country over the years, as well as in other countries as well. And I think the power shortage really snuck up on people, you know, really right after the pandemic. And I would say that the current administration is very receptive to it. They understand the constraints it's having on the economy right now and are convicted about solving it.
What about the restrictions around chips? And what's interesting is Microsoft just called on the administration today to say, this limitation on chip access for some of our close allies around the world is going to limit our global business.
You are a global business.
Is that something you're worried about?
Hey, we are? You know. I think I think that you're really talking about that AI diffusion act, I think, and I'm going to be curious to see where that goes. I mean, it was it was enacted pretty quickly at
the very end of the last administration. I don't know how this administration feels about it, but I would say that we share the concern that it has limitations on certain countries who are natural allies of the US who just to be able to do their business and those companies to be able to get done what they want to get done on top of these technology infrastructure platforms like AWS, they're going to need more chips, and so I think if we don't do it, we're going to
basically give up that business and those relationships to other countries who can provide those chips, and I think we're better off being partners with them.
Is it a risk to AWS.
It's not so much risk. I mean, I mean it had it, you know, in the scheme of things. It's
not a big swinger. But I also think that there are so many countries who are in the early stages of their economic development who both really need access to the most cutting edge sophisticated technology to build the right customer experiences, and that could be big geographic markets for companies like ours and lots of other technology companies, where I think it would be a shame to limit them and to limit the companies.
The AI diffusion rules that was brought in very swiftly by the Biden administration all of this is in the context of US versus China and not wanting to get the most sophisticated equipment and chip and technology into China. What rate for us for a moment the administration and whether it's been positive or negative for your business when it comes to China Dominimus, for example, the fact that Chinese competitors, if we call them that, Shean and the like it can have to pay more to get goods
into the country. Does that help or hinder you?
Well, you know, I would say, you know, on Deminimus specifically, you know, we have a certain number of items that are shipped in that way as well, for things like Hall, which is our new low price offering. We maybe have less of it than some other companies like the ones that you mentioned, but I think it's early in this administration. But what I would say is that it is encouraging to us that we have an administry that wants to hear from business. I would say that, you know, we've
been a business through six administrations. Every single one of them are primary for focuses to take care of customers. But we try to build a productive relationship with the administration because we want to help the country, and I would say that some administrations are more receptive to it than others. But this administration cares about what business thinks. And I've always been surprised that it isn't obvious that the best economic results for a country are going to
be when the public and the private sector collaborate. And you know, I don't expect the government to koutout to what companies want, but they should get their feedback and their input because they're going to make policies better together if they collaborate. And I'm encouraged early on that this administration wants to talk to businesses.
Are you taking calls possily?
You know, I take calls. We talked to you know, the same thing with all the administrations. We talk to people in the administration. We share what's working for us, what's not working for us, concerns that we have. As I said, some administrations care more about our feedback than others.
Has Trump can about yours?
Have you spoken to I have spoken to the President. Look, as I said, this administration has been pretty busy the first month, and but I am encouraged that they are having conversations with businesses and they do care about our feedback and we'll see what happens. But I you know, it starts with a dialogue. You have to have a dialogue to have any kind of relationship, and.
They care about AI infrastructure. Just take stargate. Are we going to hear more from you on how much you're investing here in the United States on the AI infrastructure build out as well?
Well, you know, as we talked about earlier, we said it was you know, directionally right in terms of the run rate on our capex. But you know, we're spending a lot on AI infrastructure, and the lion's share of it is not just on AI but also in this country in the US. We spend elsewhere because we have a global business. We have customers everywhere. We have customers, you know, a couple hundred countries. But we have a pretty substantial investment that I don't expect to attenuate soon.
Only we could get a number. I'm interested in something that perhaps is going to feel a more sensitive topic, and it comes around perhaps some words that were missing in your annual report this year, which we're diversity and inclusion. I put this in the context of the administration as it stands, because I know that Amazon strives to be
the Earth's best employer. And I'm just wondering how your employees react to perhaps the lack of certain words now involved, and whether or not programs might be forced to change or not.
Yeah, well, what I would tell you just at a high level, if you serve as many customers as we do, in as many diverse groups as we do, and we intend to moving forward, you have to have a diverse team to be able to build products that work for everybody. And that has always been our intention to continues to
be our intention. I think that you know, there were so many programs that we launched and other companies launched in the pandemic, and as you probably have seen over the last three years, we've gone through very thoroughly every single one of our business areas, and the programs that we had conviction about we doubled down on, and the programs that we don't have conviction about, we streamlined and
we stopped doing. And so we did the same thing and looking at all of our programs on diversity, and you know, we have some programs that we have doubled down on. A good example is our Career Choice inside our Fulfillment Network, our Fulfillment Center. Teammates are able to get an advanced education for free on us to advance their career and their own development. And that has been very, very successful and very meaningful, and so we doubled down
our program like that. There are other programs that really just haven't been that successful and haven't moved the needle much, and those we just moved away from. But we have first group. We're trying to continue to build out a diverse group and that won't.
Change and you can't. You can still use that word ultimately, you're not having to reframe it.
That is. I mean, look, you can call lots of people, call lots of different things, but we have a giant customer base of every imaginable group of people where we want builders who can build for them.
Culture is key. Yeah, and you just talked about how you're doing more is less. It's always a focus on frugality. That's in your very principles. That's something you've been doing at the employee base as well. You wrote out made it very clear that they were going to be reducing layers.
How is that going, Yeah, it's gone. Well. You know, I look, if you have a company where the culture is an important ingredient in your success, which has absolutely been true for Amazon. It's not your birth rate to keep having a strong culture, you know, especially as you grow the number of people, the number of businesses you're in, the geographies that you're in, and so you have to
work at it all the time. And for us, you know, there are two areas when we looked at it as a leadership team last year that we wanted to strengthen. One was we have always hired really strong owners, smart ambitious, strong owners who get to own the allian's share of In this case, I would say, you know ninety plus percent of the decisions, and they you know, as you add a lot of people, you end up with a lot of middle managers, and those middle managers, all well intended,
want to put their fingerprint on everything. So you end up with these people being in the pre meeting for the pre meeting, for the pre meeting for the decision meeting, and not always making recommendations and owning things the way
we want that type of ownership. So we took a goal collectively to increase the ratio of individual contributors to managers by over fifteen percent as a company by the end of this quarter, we've made very good progress in that we've beat that already and it's going to allow us for the people that are doing the work, they're going to have more ownership and they're going to be able to move more QUI And then I think the other thing we saw was that if you're a culture
that invents a lot and collaborates a lot like we do, if you don't have people in the office together doing that invention, it's just meaningfully worse. And you know, you don't invent the same way, you don't collaborate the same way, you don't connect with each other the same way, you don't learn the culture the same way. And so having people back in the office together more frequently, we felt very strong. We bet it's going to be better for customers in the business.
Let's talk about that invention and that collaboration. We've got a new quantum chip us A lot love the name. What does that mean for you to have this more efficient chip at this exact moment. Will we start seeing it be practically useful soon?
Welltum compute. Quantum computing is very high potential. It has the chance to solve some very computationally intense problems, and I still think it's realistically a few years away from having a real shot at solving those problems. But you have to solve a bunch of these challenges that relate to quantum computing along the way, and one of them really is around error correction on the CUBIS, and that's
what Osla does. It's a very unique inventive way to do error correction on the CUBIS that makes a meaningful difference, and we're excited about that milestone. You can't get to something that has real impact unless you get those milestones done along the way, and you invent along the way, and it's just another example of invention.
I feel the learning of how generative AI suddenly became not just in the business parlay, but suddenly everyone was discussing it. I think people are aware quantum could do the same thing. So when you hear people debating between two decades or five years, where do you sit on the grounder scope of that?
Gosh, you know, I don't know for sure. You know, I would say I'm hopeful that it's more in the five ish year range than it is the twenty year range. You know, all these things that are successful are seven ten twenty year overnight successes. You know, it wasn't like you know, if you look at gender of AI, it's just kind of another evolution of AI. But we've been working on AI for fifty some odd years, I mean, and it's just boom, it happened, and it really shocked
us when it actually was more accessible and worked. And I think the same thing could happen with quantum computing, which is you know, takes a long time, takes a long time, takes a long and then all of a sudden it's functional and solves problems that you couldn't solve easily or cost effectively before. And it just feels like it happened overnight. But quantum computing we've been working on now for ten plus years.
And then the euphoria comes and then people try to make head or tail of how long that EUFORIA lasts. Going back to the investment that you make, and particularly in generative AI, do you think it's going to be peak here for generative AI in terms of that investment that Amazon makes, I don't know.
You know, it's funny, I have this feeling that you're going to end up with some people that feel disillusioned about gender of AI because the investment or you getting the commensurate return. It's still very early. So many companies that are really doing pilots right now their general of AI applications and you read see a little bit of it.
But I think that the smart companies are going to figure out which are the initiatives that can really change their customer experience and their businesses and keep investing in general AI, and the slower companies are going to wait to see if it's safe to go outside, and they'll be behind by two or three years, maybe more because the reality is even more soll than software development, General
of AI is very iterative. It's not on software development you can get on a whiteboard with a team of architects and design something and maybe it doesn't work exactly as you design it, but largely you know, whereas in general of AI, the models they get better at kind of disproportionate rates. Sometimes you know, scaling low.
Have we've got a new scaling laws.
I mean, I think that a lot of times when you're building models and the model gets so much better and you talk to the scientists and the team, they just can't believe how much better it got because the model is learning itself. And so I think that if you actually aren't investing in general AI, you're going to be behind by even the amount of time that you waited, because there are so many lessons you get from iterating and building applications.
Today, and you want to be the supermarket of AI feels like agnostic to the models, as it is with Amazon alexaplus.
Well, you know, look, the truth is what we care most about in all our businesses, but as it relates to aws and AI, we want our customers to be able to change their customer experiences and improve their businesses so they can last over a long period time successfully. And if we do right by our customers and take the long term approach we do, and they're able to run their applications successfully on top of our technology infrastructure services,
then they're successful and we ride along with them. And so you know, we in all these areas, we have services we build ourselves. In the models area, we have Amazon Nova, which people are really excited about because it's got comparable intelligence to the leading models in the world, but it's meaningfully less expensive and lower latency. But if customers prefer to run other models. We have huge partnership
with Anthropic and with Lama and Mistraw deep Seek. I mean, we have the largest collection of leading foundation models in the world, and if customers are having success with those, then we're happy. And the truth is, if you build a lot of general of AI applications, people don't realize this. You use multiple model types, often in the same application.
Even Alexa Plus, as we talked about, uses multiple foundation models, and so we want people to use the right model for their applications, and then we make it easy for them to switch between them and run it easily and successfully in AWS.
Andy Jesse, perfect place to leave it. Start with Alexa plus and non Alexa plus and all the generation and generative AI that comes with it. We thank you so much, thanks for having me. Andy Jesse, President and CEO of Amazon