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Amazon (AMZN) employees will be required to work in the office five days a week starting in the new year, tightening rules that allowed some employees to work from home in an effort to revitalize the company’s culture and implement CEO Andy Jassy’s broader agenda for restructuring and austerity.
The successor to Amazon’s longtime CEO Jeff Bezos has made strengthening the company’s culture a top priority.
“We want to operate like the biggest startup in the world,” he wrote in a memo to employees earlier this month. He has worked for years to improve Everything Store’s cost structure and operating margins. And beyond operations, the company faces other challenges, from upstart discount retailers to a persistent perception that it’s falling behind in the AI arms race.
But the final hurdle may already have been cleared.
Analysts say Amazon’s cloud business, AWS, may even be in a better position as it invests heavily to catch up with industry leader Microsoft (MSFT). Amazon’s ability to deploy its own chips in its own data centers, at a fraction of the cost of relying on Nvidia’s chips, is key.
Some analysts argue that Amazon has an advantage over its competitors on two fronts: First, Microsoft, which received a rare downgrade earlier this week for being overly reliant on Nvidia (NVDA) AI infrastructure, or, as DA Davidson managing director Gil Luria told Yahoo Finance, “Microsoft is so reliant on Nvidia that it’s essentially transferring wealth from its own shareholders to Nvidia shareholders.”
Andy Jassy onstage at the 2022 New York Times DealBook in New York City on November 30, 2022. (Toth Robinson/Getty Images for The New York Times) (Toth Robinson via Getty Images)
Jassy also appears to have an answer to recent complaints about the return on investment as tech giants pour tens of billions of dollars into AI-related capital expenditures: Amazon expects AI to benefit its cloud business by tens of billions of dollars over the next few years.
Of course, it’s too early to tell whether something like “AI chip sovereignty” (a pun on vertical integration) will be a key factor in monetizing AI tools, or whether unseating Nvidia in the battle for chips will be all that useful.Amazon has taken a more “everyone-welcomes” marketplace approach to large-scale language models, letting customers choose from a range of advanced models rather than pitching a single proprietary product.
Some on Wall Street see a near-term advantage over another rival, Google, which is struggling with the potential threat of ChatGPT disrupting its search-based business model and increased antitrust enforcement over its search practices, and the short-term risks that make Amazon look more attractive.
The story continues
Amazon shares are up nearly 30% this year, outperforming only Nvidia’s astounding rise and Meta’s turnaround among its “Magnificent Seven” peers.
With the company reportedly set to unveil a new AI-powered Alexa as soon as next month, the most powerful cultural shift yet to have a positive impact on Amazon’s AI story may be.
Hamza Shaaban is a reporter covering markets and economics for Yahoo Finance. Follow Hamza at X translation:.
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