Amazon.com, Inc. (NASDAQ:AMZN) Q2 2023 Earnings Call Transcript

And so we have a lot of features that we’re adding. We have a number of service pieces that we need to add really around helping on big buys, do some of the service substantiations. And so we have a lot of functionality that we’re very quickly adding to the mix here. But I don’t think we’re close to being done growing there, and that is a very strong area of focus for our stores team and for our senior leadership team as well.

Operator: And our next question comes from the line of Brent Thill with Jefferies.

Brent Thill: Andy, just on AI monetization. Can you just talk to when you think you’ll start to see that flow into the AWS business? Is that 2024? Do you feel like the back half, you’ll start to see that as a bigger impact for the business?

Andrew Jassy: Yes. Good question, Brent. What I would say is that we have had a very significant amount of business in AWS driven by machine learning and AI for several years. And you’ve seen that largely in the form of compute as customers have been doing a lot of machine learning training and then running their models and production on top of AWS and our compute instances. But you’ve also seen it in the form of the 20-plus machine learning services that we’ve had out there for a few years. I think when you’re talking about the big potential explosion in generative AI, which everybody is excited about, including us, I think we’re in the very early stages there. We’re a few steps into a marathon in my opinion. I think it’s going to be transformative, and I think it’s going to transform virtually every customer experience that we know.

But I think it’s really early. I think most companies are still figuring out how they want to approach it. They’re figuring how to train models. They want to — they don’t want to build their own very large language models. They want to take other models and customize it, and services like Bedrock enable them to do so. But it’s very early. And so I expect that will be very large, but it will be in the future.

Operator: And the next question comes from the line of Eric Sheridan with Goldman Sachs.

Eric Sheridan: Thanks for all the detail in the prepared remarks around framing some of those key issues. Andy, maybe coming back to grocery. There’s been a lot of coverage in the press around your grocery initiative in the last couple of days. When you take a step back, how much do you think about solving the grocery dynamic in the business to capitalize on it the way you want? Is it an element of things you need to build and the application of capital versus elements of executing on what’s already in place and sort of aligning the assets in place against the scale of the Amazon Prime household in your customer base?

Andrew Jassy: Yes, it’s a good question. It’s a little bit of both. I mean if I just step back and think about how we think about grocery, we continue to have this very big business in nonperishables, which is where a lot of the mass merchandisers started in grocery several years ago. So these are areas like consumables and canned goods and pet food and beauty and health. And as I said, it’s a big business that’s continuing to grow. But if you want to be able to serve more customers, which we do, and there are a whole number of reasons for that and customers want it, you have to have a strong physical presence. We started with Whole Foods, which is the pioneer in organic grocery, it continues to be, and we really like the way Whole Foods is growing.