Last week, AWS experienced a significant leadership change with the departure of Matt Wood, the Vice President of AI, after a 15-year tenure. Wood had played a key role in shaping the company's artificial intelligence initiatives and was appointed VP in September 2022, just prior to the launch of ChatGPT. His exit occurs as AWS finds itself at a critical juncture, facing stiff competition in the rapidly growing field of generative AI.
AWS, under former CEO Adam Selipsky, has faced criticism for missing key opportunities in the generative AI space. According to reports, AWS had initially planned to introduce a generative AI product to rival ChatGPT during its November 2022 annual conference. However, technical issues delayed the launch. In addition, AWS reportedly declined early opportunities to invest in leading generative AI startups Cohere and Anthropic. Though it later attempted to invest in Cohere, the offer was turned down, and AWS ended up partnering with Google in a joint investment in Anthropic.
Amazon as a whole has also struggled to gain significant traction in generative AI. Recent events, such as the departure of key executives from its cashier-less tech division, Just Walk Out, and the decision to use Anthropic’s models to enhance Alexa, have highlighted some of the company’s design challenges in the AI space.
Despite these setbacks, AWS is working to regain its footing. Matt Garman, the current CEO, has been focused on rebuilding AWS’ AI capabilities. This includes acquiring AI startups, such as Adept, and investing in internal projects like the Olympus training system. AWS has also been developing custom silicon, such as its Trainium chips, to improve the efficiency of AI model training and execution, with the next generation set to launch later this year. AWS claims that its generative AI services, including its Bedrock platform, have already achieved a substantial "multi-billion-dollar" run rate.
However, AWS’ journey towards generative AI success remains uncertain. Investors are becoming more skeptical of Big Tech’s AI ventures. Following Amazon's Q2 earnings call, the company’s stock saw its biggest drop since October 2022. A Gartner survey also revealed that nearly half of businesses view proving the value of generative AI as a major hurdle to adoption. Gartner predicts that by 2026, approximately one-third of generative AI projects will be discontinued after their proof-of-concept phase due to the associated high costs.
While AWS is working to position itself as a cost-effective provider through its custom silicon efforts, the road ahead is fraught with challenges. Maintaining progress in the face of both internal struggles and market pressures will be difficult. The departure of executives like Matt Wood certainly raises concerns about AWS' ability to keep pace in the competitive AI landscape, though the company may still have strategies in place to overcome these hurdles.
