MW Nvidia rules the AI chip market. Here's what Amazon's CEO wants to do about that.

By Emily Bary

Andy Jassy's annual letter to shareholders touched on the high cost of AI chips and the future of inferencing work - as well as lessons in leadership

Amazon.com Inc. Chief Executive Andy Jassy said that expensive chips are holding back artificial-intelligence innovation - but he thinks that will change soon.

"AI does not have to be as expensive as it is today, and it won't be in the future," Jassy wrote in Amazon's $(AMZN)$ latest annual shareholder letter, released Thursday. "Chips are the biggest culprit."

Jassy didn't mention Nvidia Corp. $(NVDA)$ directly in his letter, but noted that "most AI to date has been built on one chip provider." And that's been "pricey."

Amazon is in the game as well, with its custom Trainium chips that Jassy said offer better value than graphics processing units currently on the market. (Application-specific integrated circuits like Trainium are indeed cheaper than GPUs, though analysts have noted that GPUs have more high-bandwidth memory and an ability to be reprogrammed, so there are tradeoffs.)

See also: Why Amazon CEO Andy Jassy says the company is especially suited to win in AI

Jassy said there's an opportunity for Amazon as inferencing becomes a bigger part of the AI story. Chips are used for both training models and doing inference work, which means having models draw conclusions based on new information.

"We feel strong urgency to make inference less expensive for customers," Jassy wrote. "More price-performant chips will help. But, inference will also get meaningfully more efficient in the next couple of years with improvements in model distillation, prompt caching, computing infrastructure, and model architectures."

Once AI gets cheaper, it will be "used as expansively as customers desire, and also lead to more overall AI spending," according to Jassy. He drew a parallel to the Amazon Web Services cloud-computing business, which he once led.

"Revolutionizing the cost of compute and storage happily led to lower cost per unit, and more invention, better customer experiences and more absolute infrastructure spend," Jassy reflected.

See also: Nvidia and AMD just helped the chip sector to its best day ever

His shareholder letter touched on other matters as well. Jassy acknowledged that personal assistants haven't yet hit their stride and said that Amazon is "not done improving speed" when it comes to getting customers their product orders ever more quickly.

He also offered some lessons in leadership, dialing in on a few of Amazon's 16 leadership principles. One is that leaders "are right a lot," though he said that doesn't mean that their ideas are chosen all the time, but rather that they want to get the best answer, even if it doesn't conform to their original view.

Additionally, leaders are driven to "learn and be curious," and they're able to "disagree and commit." What that means is that people at Amazon are told to speak up when they have a differing opinion, but then must get on board with whatever the team's ultimate decision is.

"Everybody - even those who advocated for a different solution than the one chosen - must commit to making that decision a success," he wrote.

-Emily Bary

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April 10, 2025 08:45 ET (12:45 GMT)

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