Amazon Is Now a Real AI Contender

“SEATTLE -- Not long ago, Amazon was seen as an also-ran in the great AI race.

 

Microsoft, in particular -- with its partnership with OpenAI and cloud business outpacing Amazon's AWS -- seemed to have reclaimed its place as the Puget Sound's reigning tech giant.

 

Things are looking much different for AWS today.

 

That is thanks to some savvy deals of its own with OpenAI and Anthropic, plans for $200 billion of infrastructure spending and Amazon's long-term bet on custom chips. It also isn't involved in the ugly tech trial of the year sucking in the biggest names in AI, from Elon Musk and Sam Altman to Mira Murati and Microsoft CEO Satya Nadella.

 

"People thought we were behind," Matt Garman, head of Amazon's cloud-computing business, AWS, told me in an interview here on the corporate campus. "As we've progressed, they've seen our strategies start to evolve, and they've started to see other people realize that that strategy has a lot of merit."

 

Amazon's ascent into the AI conversation makes it likely that the temperature around the technology will become less heated as AWS works to sell to real companies -- rather than investors hyped about the possibility of the next Skynet.

 

Unlike others, Garman has already taken a measured tone and hasn't jumped on the bandwagon predicting robot-apocalypses or Great Depression-level job losses.

 

"Look, everyone's entitled to their opinion, but I don't think that that's at all true," Garman said. "I think that there is the potential to create massive value, and I think there's going to be new and different types of jobs. People are going to have to adjust, learn different skills and embrace it."

 

Such hype hasn't sold the general public on the technology. And after months of growing concerns, other tech leaders are joining Garman in trying to reframe how AI is seen.

 

After his San Francisco house was firebombed, for example, OpenAI's Altman called for a de-escalation of the rhetoric around AI.

 

OpenAI had been on the forefront of warning about the dramatic changes ahead. The change in tone is part PR, for sure. But also a shift in the nature of the technology, according to Greg Brockman, OpenAI president.

 

The emergence of large language models, rooted in understanding humans, changes things in his mind. "You just realize we have a totally different technological path to get to the outcome we're talking about, and it's a much more optimistic one," he said during an appearance late last month on the "Core Memory" podcast.

 

There are other ways the technology is better appreciated today as well. And that makes AWS's strategy look prescient.

 

But first a brief history.

 

Garman isn't part of the blockbuster AI trial between Musk and Altman over the creation of OpenAI under way in the San Francisco Bay Area. But testimony and records underscore how Amazon's might loomed over the minds of players in the early days of OpenAI. Records from Microsoft, which became a big backer of OpenAI, show it was worried its own cloud-computing business, Azure, could be hurt if it didn't help the then-nascent AI lab.

 

"I guess the other thing to think about here is the PR downside of us not funding them, and having them storm off to Amazon in a huff and s -- -talk us and Azure on the way out," Kevin Scott, Microsoft CTO, wrote in a 2018 memo that was produced as part of the Altman-Musk legal battle.

 

OpenAI's 2022 breakthrough with its AI chatbot left Amazon looking ill-positioned to take advantage of the boom in expensive computing needed to train artificial intelligence.

 

Conventional wisdom said training so-called foundation models required expensive GPUs made by Nvidia -- AWS had some but not nearly as many as it might like. Last fall, a Bernstein analyst ranked AWS as being in "last place in AI" because of its slower rate of cloud growth compared with Microsoft and Google and its allocation of Nvidia chips.

 

But in Amazon style, Garman seemed OK that the outside world was struggling to see its strategy clearly.

 

As Amazon founder Jeff Bezos liked to say: You have to be willing to be misunderstood if you're going to innovate.

 

That was originally the case for AWS. Garman, who had interned at Amazon, joined AWS out of grad school, becoming its first product manager, one of many roles on the way to becoming CEO in 2024.

 

Along the way, as the cloud business progressed from a side project to a major part of Amazon's business, companies stopped asking why they should turn their computing needs over to a bookseller.

 

The current moment was helped by a decision made more than a decade ago to acquire Annapurna Labs to begin designing chips for AWS's cloud-computing needs -- the goal being lower cost and using less energy.

 

That effort developed a chip called Graviton that handles traditional CPU needs, and Trainium for AI. Both are useful for inference, the next phase of AI compute needs. (The same demand for inference computing is fueling a resurgence in Intel shares.)

 

If the chips business was a stand-alone unit, Amazon would be generating an annual run rate of $50 billion from the sale of chips to AWS and others. Trainium chips are at the heart of huge investment commitments from both OpenAI and Anthropic, deals that involved Amazon investing billions of dollars into them.

 

Even Nvidia's Jensen Huang has recently said he was too slow to see the importance of such investing. "Without Anthropic, why would there be Trainium growth at all? It's 100% Anthropic," he said last month on the Dwarkesh Podcast. "I didn't deeply internalize how difficult it would be to build a foundation AI lab like OpenAI and Anthropic and the fact that they needed huge investments from the supplier themselves."

 

OpenAI has also announced it restructured its relationship with Microsoft, clearing the way for a relationship with Amazon. On the day of the opening arguments in the Musk-Altman trial, Amazon and OpenAI executives were celebrating an announcement that detailed how AWS customers would be able to use OpenAI models.

 

"We're quite excited about what that unlocks for customers," Garman told me later.

 

There's a lot of road left ahead in the AI race.” [1]

 

1. Amazon Is Now a Real AI Contender. Higgins, Tim.  Wall Street Journal, Eastern edition; New York, N.Y.. 18 May 2026: B4.