Amazon CEO Andy Jassy tried to calm concern about AI cloud competition. Wall Street isn't buying it.

Core Viewpoint - Amazon's CEO Andy Jassy attempted to reassure investors regarding AWS's growth and its competitive position in the AI sector, but the market reacted negatively, leading to a 7% drop in stock price after disappointing profit guidance and unclear responses on AI [1]. Group 1: AWS Growth and Market Position - AWS reported a revenue growth of 17%, which is significantly slower compared to competitors like Microsoft and Google [2]. - Jassy emphasized that AWS has a larger revenue base, making growth comparisons challenging, and highlighted AWS's superior security and functionality [2]. - AWS's annual revenue run rate is $123 billion, and Jassy expressed optimism about its future potential [3]. Group 2: AI Market and Competitive Landscape - Jassy described the AI market as "early" and "top-heavy," dominated by a few popular models, and mentioned AWS's lower-cost Trainium AI chip as a competitive advantage [4]. - Concerns were raised about AWS potentially falling behind in the AI race, with analysts noting that competitors are gaining momentum [9]. - AWS's cloud market share remained stable over the past year, with AWS holding 30%, Microsoft at 20%, and Google at 13% [10]. Group 3: Operational Challenges - Jassy acknowledged that AWS is facing capacity issues related to electricity, chips, and server components, with power being the primary constraint [9]. - It is anticipated that it will take several quarters for AWS to address the demand shortage [9]. - Jassy pointed out that a significant portion of global IT spending is still on-premises, indicating a potential shift towards cloud solutions in the future [8].