Amazon CEO: AWS’ $100B Run Rate ‘More Than Any Other Cloud Provider’

‘We watched the incremental revenue added each quarter, and in Q4 AWS added more than $1.1 billion in incremental quarter-over-quarter revenue, which on an FX (foreign exchange) neutral basis is more than any other cloud provider, as far as we can tell,’ says Amazon CEO Andy Jassy.

Growth in Amazon Web Services revenue in fiscal 2023 of 13 percent over fiscal 2022 is giving AWS an annualized revenue run rate of $100 billion, Amazon CEO Andy Jassy told financial analysts Thursday.

Jassy, during his prepared remarks at Amazon’s fiscal fourth quarter and full year 2023 quarterly financial presentation, said growth in AWS revenue is helping the company beat its cloud competition.

“We watched the incremental revenue added each quarter, and in Q4 AWS added more than $1.1 billion in incremental quarter-over-quarter revenue, which on an FX (foreign exchange) neutral basis is more than any other cloud provider, as far as we can tell,” he told investors.

Even as AWS continued to work on cost optimization, the company also accelerated larger new deals with customers including Salesforce, BMW, Nvidia, LG, Hyundai, Merck, MUFG (Mitsubishi UFJ Financial Group), Axiata Group Berhad, and several other global enterprises, Jassy said.

“Our customer pipeline remains strong as existing customers are renewing at larger commitments over longer periods, and migrations are growing,” he said.

The year 2023 was also a significant year of delivery and customer trial for GenAI in AWS, Jassy said.

AWS has in the past discussed its vision of three distinct layers in the GenAI stack, each of which is large and each of which the company has invested deeply, Jassy said.

At the bottom layer are customers building their own models and running training and inference on compute, and AWS offers the most expansive collection of compute instances with Nvidia chips, he said. AWS also has customers looking for AWS to push the price-performance envelope on AI chips, and the company responded with its Graviton4 for generalized CPU chips which he said offer 40 percent more price performance than other x86 CPUs.

“As a result, we built custom AI training chips named Trainium and inference chips named Inferentia,” he said. “At re:Invent, we now have Trainium2 to which offers four times faster training performance and three times more memory capacity versus the first generation of Trainium, enabling advantageous price performance versus alternatives.”

The middle layer is where companies seek to leverage an existing large language model, customize it with their own data, and leverage AWS security and other features, all as a managed service, Jassy said. There, AWS launched its Bedrock AI technology, and has already signed several thousands of customers in a few months, he said.

“The team continues to rapidly iterate on Bedrock, recently delivering capabilities including Guardrails to safeguard what questions applications will answer, knowledge bases to expand models’ knowledge base with retrieval augmented generation or RAG in real time queries, agents to complete multi-step tasks, and fine tuning to keep teaching and refining models, all of which will help customers applications be higher quality and have better customer experiences,” he said.

At the top layer of the AI stack is the application layer, where one of the best early GenAI applications is a coding companion, Jassy said. AWS re:Invent saw the launch of Amazon Q, which he called an expert on AWS which writes, debugs and tests code; manages such translations as moving from an old to a new version of Java; and query customers’ various data repositories intranets, wikis, or over 40 different popular data connectors in Salesforce, Amazon S3, ServiceNow, Slack, Atlassian, or others, he said.

“It was designed with security and privacy in mind from the start, making it easier for organizations to use generative AI safely,” he said. “Q is the most capable work assistant, and another service that customers are very excited about. By the way, don't underestimate the point about Bedrock and Q inheriting the same security and access control as customers get with AWS. Security is a big deal and an important differentiator between cloud providers. The data in these models is some of a company's most sensitive and critical assets. With AWS’ advantage in security capabilities and track record relative to other providers, we continue to see momentum around customers wanting to do their long term GenAI work with AWS.”

GenAI is and will continue to be an area of pervasive focus and investment across Amazon, Jassy said.

“[This is] primarily because there are few initiatives, if any, that give us the chance to reinvent so many of our customer experiences and processes, and we believe it will ultimately drive 10s of billions of dollars of revenue for Amazon over the next several years,” he said.

Amazon By The Numbers

For its fourth fiscal quarter 2023, which ended December 31, Amazon reported revenue of $169.96 billion, up 13.9 percent over the $149.20 billion the company reported for fiscal fourth quarter 2022.

This included product revenue of $76.70 billion, up 8.7 percent over last year’s $70.53 billion, and service revenue of $93.26 billion, up 18.5 percent over last year’s $78.67 billion.

Included in the total revenue was AWS sales of $24.20 billion, up 13.2 percent over last year’s $21.38 billion. AWS accounted for about 14 percent of Amazon’s total revenue.

For the quarter, Amazon reported a net income of $10.62 billion or $1.00 per share, up significantly from last year’s $278 million or 3 cents per share.

For all of fiscal year 2023, Amazon reported total revenue of $574.79 billion, up 11.8 percent over the $513.98 billion the company reported for fiscal 2022.

This included product revenue of $255.90 billion, up 5.6 percent over last year’s $242.90 billion, and service revenue of $318.90 billion, up 17.6 percent over last year’s $271.08 billion.

Included in the total 2023 revenue was AWS sales of $90.76 billion, up 13.3 percent over last year’s $80.10 billion. AWS accounted for about 16 percent of Amazon’s total revenue.

For the year, Amazon reported a net income of $30.43 billion or $2.90 per share, up significantly from last year’s net loss of $2.72 billion or 27 cents per share.

Looking ahead, Amazon said it expects first fiscal quarter 2024 revenue of $138.0 billion to $143.5 billion, or up between 8 percent and 13 percent over first fiscal quarter 2023 revenue.

Amazon reported its fiscal 2023 results after the close of trade Thursday.

Investors seemed to have liked what they heard from Amazon. Prior to close of the trading day, Amazon stock rose 2.63 percent to $159.28 per share with after-hours trading sending shares up 6.99 percent to $170.45.