interview with amazon's CEO

Q1: How you see things and how you see things as it relates specifically to inflation right now?

Well, what we see are consumers are spending but they’re just being really careful about what they spend on and how much they spend.
And so, wherever they can, they’re trading down an average selling price.
you see consumers wherever they could find a deal, they take the deal.
We see it’s going to take a lot for people not to buy detergent or shampoo or things like that. You can see that in the growth of our everyday essentials business which last, you know, Q4 of 2023 was over 20 percent year-over-year.
Some of that is because people are going to buy all time, but some of that it’s just because of the speed that we have and we’re getting to people, so they consider us for more.
But people are still buying, they’re just being careful about what they shop for. And they’re not.

Q2: But you’re seeing a trade down?

We see people trading down on ASP wherever they can. You know and then I’d say on the enterprise side, you know, the last couple years, companies have tried to save money however they could and we saw it a lot in our AWS business and the cost optimization we saw.
But I think a lot of that cost optimization has attenuated and we’ve seen a lot of the deals that people were talking about with us for a long time, you know, that were sitting on the back burner have started to move. Migrations have picked up again.
The pipeline is really full. And I think people have moved from largely trying to save cost to figuring out how to modernize their infrastructure again, move from on premises to the cloud and then think about how they can use generative AI to change their business.

Q3: Are you seeing though on the cost side on the inflation side, things continue to rise? Are there places where you see price declines? Are you seeing anything on terms of wages either on your own employees or others?

Again, we see consumers are spending they’re just trading down, in discretionary items things like TVs or computers or electronics.
You know, we’re growing our market segment share at a faster rate there than others, but still at a lower rate than what we see in a healthy economy.

Q4: where Amazon was going to play in this AI world. And you now say it is going to change everything and that you have really almost shifted the whole company towards AI in almost every space now.

Yeah, we’ve been saying it for a while and I do think that AI is going to transform every customer experience that we know.
And you know, I think a lot of the discussion has been around applications.
And you know, starting really with ChatGPT which really caught people’s attention, but we think there are three big macro areas of the generative AI stack, each of which are gigantic and each of which we’re investing deeply in. And you know, I think of it as at the lowest layer are for people that are building their own large language models, and the two things that really matter there is the compute, to train the model, and to run the predictions of the inferences. And what matters in that is the chip.