AWS shifts focus to LLMs, generative AI as growth continues to taper

Amazon’s cloud computing division, AWS, is shifting its focus towards large language models (LLMs) and generative AI-based offerings as it continues to see a downward spiral in overall revenue growth.

Amazon Web Services (AWS) has posted 16% year-on-year growth for the first quarter of fiscal year 2023 on the back of revenue of $21.4 billion. However, this revenue growth is slower compared to the 20%, 27.5%, and 33% growth seen in the fourth quarter, third quarter, and second quarter of 2022, respectively. 

The slowdown in growth, according to top executives of the company, can be attributed to enterprises optimizing cloud spend due to uncertain macroeconomic conditions.

“Given the ongoing economic uncertainty, customers of all sizes in all industries continue to look for cost savings across their businesses, similar to what you’ve seen us doing at Amazon. As expected, customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter,” Brian Olsavsky, chief financial officer at AWS, said during an earnings call.

“We are seeing these optimizations continue into the second quarter with April revenue growth rates about 500 basis points lower than what we saw in Q1,” Olsavsky added.

In response to the trend, Olsavsky said that AWS’ sales and support teams have continued to spend much of their time helping customers optimize their spending to help them “better weather this uncertain economy.”