Amazon CEO Andy Jassy’s 2023 shareholder letter

Pricey shareholders:

As I sit down to write down my second annual shareholder letter as CEO, I discover myself optimistic and energized by what lies forward for Amazon. Regardless of 2022 being one of many more durable macroeconomic years in latest reminiscence, and with a few of our personal working challenges in addition, we nonetheless discovered a approach to develop demand (on high of the unprecedented progress we skilled within the first half of the pandemic). We innovated in our largest companies to meaningfully enhance buyer expertise quick and long run. And, we made essential changes in our funding choices and the best way by which we’ll invent transferring ahead, whereas nonetheless preserving the long-term investments that we consider can change the way forward for Amazon for purchasers, shareholders, and workers.

Whereas there have been an uncommon variety of simultaneous challenges this previous 12 months, the truth is that for those who function in massive, dynamic, international market segments with many succesful and well-funded opponents (the circumstances by which Amazon operates all of its companies), circumstances hardly ever keep stagnant for lengthy.

Within the 25 years I have been at Amazon, there was fixed change, a lot of which we have initiated ourselves. After I joined Amazon in 1997, we had booked $15M in income in 1996, have been a books-only retailer, didn’t have a third-party market, and solely shipped to addresses within the US. Right this moment, Amazon sells almost each bodily and digital retail merchandise you possibly can think about, with a vibrant third-party vendor ecosystem that accounts for 60% of our unit gross sales, and reaches clients in just about each nation world wide. Equally, constructing a enterprise round a set of know-how infrastructure companies within the cloud was not apparent in 2003 after we began pursuing AWS, and nonetheless wasn’t after we launched our first companies in 2006. Having just about each e book at your fingertips in 60 seconds, after which with the ability to retailer and retrieve them on a light-weight digital reader was not “a factor” but after we launched Kindle in 2007, nor was a voice-driven private assistant like Alexa (launched in 2014) that you can use to entry leisure, management your good dwelling, store, and retrieve all kinds of knowledge.

There have additionally been occasions when macroeconomic circumstances or working inefficiencies have offered us with new challenges. As an example, within the 2001 dot-com crash, we needed to safe letters of credit score to purchase stock for the vacations, streamline prices to ship higher profitability for the enterprise, but nonetheless prioritized the long-term buyer expertise and enterprise we have been attempting to construct (for those who bear in mind, we truly lowered costs in most of our classes throughout that tenuous 2001 interval). You noticed this kind of balancing once more in 2008-2009 as we endured the recession provoked by the mortgage-backed securities monetary disaster. We took a number of actions to handle the price construction and effectivity of our Shops enterprise, however we additionally balanced this streamlining with funding in buyer experiences that we believed might be substantial future companies with robust returns for shareholders. In 2008, AWS was nonetheless a reasonably small, fledgling enterprise. We knew we have been on to one thing, however it nonetheless required substantial capital funding. There have been voices inside and out of doors of the corporate questioning why Amazon (recognized principally as a web-based retailer then) could be investing a lot in cloud computing. However, we knew we have been inventing one thing particular that might create loads of worth for purchasers and Amazon sooner or later. We had a head begin on potential opponents; and if something, we wished to speed up our tempo of innovation. We made the long-term resolution to proceed investing in AWS. Fifteen years later, AWS is now an $85B annual income run fee enterprise, with robust profitability, that has reworked how clients from start-ups to multinational firms to public sector organizations handle their know-how infrastructure. Amazon could be a unique firm if we might slowed funding in AWS throughout that 2008-2009 interval.

Change is at all times across the nook. Typically, you proactively invite it in, and generally it simply comes a-knocking. However, whenever you see it is coming, you must embrace it. And, the businesses that do that nicely over an extended time frame often succeed. I am optimistic about our future prospects as a result of I like the best way our group is responding to the modifications we see in entrance of us.

During the last a number of months, we took a deep look throughout the corporate, enterprise by enterprise, invention by invention, and requested ourselves whether or not we had conviction about every initiative’s long-term potential to drive sufficient income, working earnings, free money circulation, and return on invested capital. In some circumstances, it led to us shuttering sure companies. As an example, we stopped pursuing bodily retailer ideas like our Bookstores and 4 Star shops, closed our Amazon Cloth and Amazon Care efforts, and moved on from some newer gadgets the place we did not see a path to significant returns. In different circumstances, we checked out some packages that weren’t producing the returns we might hoped (e.g. free transport for all on-line grocery orders over $35) and amended them. We additionally reprioritized the place to spend our sources, which finally led to the laborious resolution to eradicate 27,000 company roles. There are a variety of different modifications that we have made over the past a number of months to streamline our general prices, and like most management groups, we’ll proceed to guage what we’re seeing in our enterprise and proceed adaptively.

We additionally regarded laborious at how we have been working collectively as a group and requested our company workers to return again to the workplace at the least three days every week, starting in Might. Throughout the pandemic, our workers rallied to get work executed from dwelling and did every thing potential to maintain up with the sudden circumstances that offered themselves. It was spectacular and I am happy with the best way our collective group got here collectively to beat unprecedented challenges for our clients, communities, and enterprise. However, we do not assume it is one of the best long-term method. We have grow to be satisfied that collaborating and inventing is simpler and simpler after we’re working collectively and studying from each other in particular person. The power and riffing on each other’s concepts occur extra freely, and most of the greatest Amazon innovations have had their breakthrough moments from folks staying behind after a gathering and dealing by concepts on a whiteboard, or persevering with the dialog on the stroll again from a gathering, or simply popping by a teammate’s workplace later that day with one other thought. Invention is commonly messy. It wanders and meanders and marinates. Serendipitous interactions assist it, and there are extra of these in-person than just about. It is also considerably simpler to study, mannequin, follow, and strengthen our tradition after we’re within the workplace collectively more often than not and surrounded by our colleagues. Innovation and our distinctive tradition have been extremely essential in our first 29 years as an organization, and I anticipate it will likely be comparably so within the subsequent 29.

A essential problem we have continued to deal with is the rising value to serve in our Shops achievement community (i.e. the price to get a product from Amazon to a buyer)—and we have made a number of modifications that we consider will meaningfully enhance our achievement prices and velocity of supply.

Throughout the early a part of the pandemic, with many bodily shops shut down, our shopper enterprise grew at a rare clip, with annual income growing from $245B in 2019 to $434B in 2022. This meant that we needed to double the achievement middle footprint that we would constructed over the prior 25 years and considerably speed up constructing a last-mile transportation community that is now the dimensions of UPS (together with a brand new sortation middle community to help with effectivity and velocity when gadgets wanted to traverse lengthy distances)—all within the span of about two years. This was no simple feat, and a whole bunch of 1000’s of Amazonians labored very laborious to make this occur. Nevertheless, not surprisingly, with that fee and scale of change, there was loads of optimization wanted to yield the meant productiveness. During the last a number of months, we have scrutinized each course of path in our achievement facilities and transportation community and redesigned scores of processes and mechanisms, leading to regular productiveness positive aspects and price reductions over the previous couple of quarters. There’s extra work to do, however we’re happy with our trajectory and the significant upside in entrance of us.

We additionally took this event to make bigger structural modifications that set us up higher to ship decrease prices and quicker velocity for a few years to return. A great instance was reevaluating how our US achievement community was organized. Till not too long ago, Amazon operated one nationwide US achievement community that distributed stock from achievement facilities unfold throughout all the nation. If an area achievement middle did not have the product a buyer ordered, we might find yourself transport it from different elements of the nation, costing us extra and growing supply occasions. This problem grew to become extra pronounced as our achievement community expanded to a whole bunch of extra nodes over the previous couple of years, distributing stock throughout extra places and growing the complexity of connecting the achievement middle and supply station nodes effectively. Final 12 months, we began rearchitecting our stock placement technique and leveraging our bigger achievement middle footprint to maneuver from a nationwide achievement community to a regionalized community mannequin. We made vital inside modifications (e.g. placement and logistics software program, processes, bodily operations) to create eight interconnected areas in smaller geographic areas. Every of those areas has broad, related choice to function in a largely self-sufficient method, whereas nonetheless with the ability to ship nationally when needed. A number of the most significant and laborious work got here from optimizing the connections between this huge quantity of infrastructure. We additionally proceed to enhance our superior machine studying algorithms to raised predict what clients in varied elements of the nation will want in order that we’ve got the fitting stock in the fitting areas on the proper time. We have not too long ago accomplished this regional roll out and just like the early outcomes. Shorter journey distances imply decrease value to serve, much less affect on the surroundings, and clients getting their orders quicker. On the latter, we’re enthusiastic about seeing extra subsequent day and same-day deliveries, and we’re on observe to have our quickest Prime supply speeds ever in 2023. Total, we stay assured about our plans to decrease prices, scale back supply occasions, and construct a meaningfully bigger retail enterprise with wholesome working margins.

AWS has an $85B annualized income run fee, continues to be early in its adoption curve, however at a juncture the place it is important to remain centered on what issues most to clients over the long-haul. Regardless of rising 29% year-over-year (“YoY”) in 2022 on a $62B income base, AWS faces short-term headwinds proper now as firms are being extra cautious in spending given the difficult, present macroeconomic circumstances. Whereas some firms would possibly obsess over how they might extract as a lot cash from clients as potential in these tight occasions, it is neither what clients need nor greatest for purchasers in the long run, so we’re taking a unique tack. One of many many benefits of AWS and cloud computing is that when your online business grows, you possibly can seamlessly scale up; and conversely, if your online business contracts, you possibly can select to present us again that capability and stop paying for it. This elasticity is exclusive to the cloud, and would not exist whenever you’ve already made costly capital investments in your personal on-premises datacenters, servers, and networking gear. In AWS, like all our companies, we’re not attempting to optimize for anybody quarter or 12 months. We’re attempting to construct buyer relationships (and a enterprise) that outlast all of us; and because of this, our AWS gross sales and help groups are spending a lot of their time serving to clients optimize their AWS spend to allow them to higher climate this unsure economic system. Many of those AWS clients inform us that they are not cost-cutting as a lot as cost-optimizing to allow them to take their sources and apply them to rising and ingenious new buyer experiences they’re planning. Clients have appreciated this customer-focused, long-term method, and we expect it will bode nicely for each clients and AWS.

Whereas these short-term headwinds soften our progress fee, we like loads of the basics that we’re seeing in AWS. Our new buyer pipeline is powerful, as are our lively migrations. Many firms use discontinuous intervals like this to step again and decide what they strategically wish to change, and we discover an growing variety of enterprises opting out of managing their very own infrastructure, and preferring to maneuver to AWS to benefit from the agility, innovation, cost-efficiency, and safety advantages. And most significantly for purchasers, AWS continues to ship new capabilities quickly (over 3,300 new options and companies launched in 2022), and spend money on long-term innovations that change what’s potential.

Chip improvement is an effective instance. In final 12 months’s letter, I discussed the funding we have been making in our general-purpose CPU processors named Graviton. Graviton2-based compute situations ship as much as 40% higher price-performance than the comparable newest technology x86-based situations; and in 2022, we delivered our Graviton3 chips, offering 25% higher efficiency than the Graviton2 processors. Additional, as machine studying adoption has continued to speed up, clients have yearned for lower-cost GPUs (the chips mostly used for machine studying). AWS began investing years in the past in these specialised chips for machine studying coaching and inference (inferences are the predictions or solutions {that a} machine studying mannequin gives). We delivered our first coaching chip in 2022 (“Trainium”); and for the most typical machine studying fashions, Trainium-based situations are as much as 140% quicker than GPU-based situations at as much as 70% decrease value. Most firms are nonetheless within the coaching stage, however as they develop fashions that graduate to large-scale manufacturing, they’re going to discover that a lot of the value is in inference as a result of fashions are educated periodically whereas inferences are occurring on a regular basis as their related utility is being exercised. We launched our first inference chips (“Inferentia”) in 2019, and so they have saved firms like Amazon over 100 million {dollars} in capital expense already. Our Inferentia2 chip, which simply launched, provides as much as 4 occasions greater throughput and ten occasions decrease latency than our first Inferentia processor. With the large upcoming progress in machine studying, clients will have the ability to get much more executed with AWS’s coaching and inference chips at a considerably decrease value. We’re not near being executed innovating right here, and this long-term funding ought to show fruitful for each clients and AWS. AWS continues to be within the early levels of its evolution, and has an opportunity for uncommon progress within the subsequent decade.

Equally excessive potential, Amazon’s Promoting enterprise is uniquely efficient for manufacturers, which is a part of why it continues to develop at a brisk clip. Akin to bodily retailers’ promoting companies promoting shelf area, end-caps, and placement of their circulars, our sponsored merchandise and types choices have been an integral a part of the Amazon buying expertise for greater than a decade. Nevertheless, in contrast to bodily retailers, Amazon can tailor these sponsored merchandise to be related to what clients are trying to find given what we learn about buying behaviors and our very deep funding in machine studying algorithms. This results in promoting that is extra helpful for purchasers; and because of this, performs higher for manufacturers. That is a part of why our Promoting income has continued to develop quickly (23% YoY in This fall 2022, 25% YoY general for 2022 on a $31B income base), at the same time as most massive advertising-focused companies’ progress have slowed over the past a number of quarters.

We attempt to be one of the best place for advertisers to construct their manufacturers. We have now close to and long-term alternatives that may assist us obtain that mission. We’re persevering with to make massive investments in machine studying to maintain honing our promoting choice algorithms. For the previous couple of years, we have invested in constructing complete, versatile, and sturdy planning and measurement options, giving entrepreneurs better perception into promoting effectiveness. An instance is Amazon Advertising Cloud (“AMC”). AMC is a “clear room” (i.e. safe digital surroundings) by which advertisers can run customized viewers and marketing campaign analytics throughout a variety of first and third-party inputs, in a privacy-safe method, to generate promoting and enterprise insights to tell their broader advertising and gross sales methods. The Promoting and AWS groups have collaborated to allow firms to retailer their information in AWS, function securely in AMC with Amazon and different third-party information sources, carry out analytics in AWS, and have the choice to activate promoting on Amazon or third-party publishers by the Amazon Demand-Facet Platform. Clients actually like this concerted functionality. We additionally see future alternative to thoughtfully combine promoting into our video, dwell sports activities, audio, and grocery merchandise. We’ll proceed to work laborious to assist manufacturers uniquely have interaction with the fitting viewers, and develop this a part of our enterprise.

Whereas it is tempting in turbulent occasions solely to focus in your present massive companies, to construct a sustainable, long-lasting, rising firm that helps clients throughout a lot of dimensions, you possibly can’t cease inventing and dealing on long-term buyer experiences that may meaningfully affect clients and your organization.

After we have a look at new funding alternatives, we ask ourselves just a few questions:

• If we have been profitable, may it’s massive and have an affordable return on invested capital?
• Is the chance being well-served right this moment?
• Do we’ve got a differentiated method?
• And, do we’ve got competence in that space? And if not, can we purchase it shortly?

If we just like the solutions to these questions, then we’ll make investments. This course of has led to some expansions that appear simple, and others that some people may not have initially guessed.

The earliest instance is after we selected to develop from simply promoting Books, to including classes like Music, Video, Electronics, and Toys. Again then (1998-1999), it wasn’t universally applauded, however looking back, it appears pretty apparent.

The identical might be mentioned for our worldwide Shops growth. In 2022, our worldwide shopper section drove $118B of income. In our bigger, established worldwide shopper companies, we’re large enough to be impacted by the slowing macroeconomic circumstances; nevertheless, the expansion in 2019-2021 on a big base was outstanding—30% compound annual progress fee (“CAGR”) within the UK, 26% in Germany, and 21% in Japan (excluding the affect of FX). Over the previous a number of years, we have invested in new worldwide geographies, together with India, Brazil, Mexico, Australia, varied European nations, the Center East, and elements of Africa. These new nations take a specific amount of mounted funding to get began and to scale, however we just like the trajectory they’re on, and their progress patterns resemble what we have seen in North America and our established worldwide geographies. Rising nations generally lack a few of the infrastructure and companies that our enterprise depends on (e.g. cost strategies, transportation companies, and web/telecom infrastructure). To resolve these challenges, we proceed to work with varied companions to ship options for purchasers. In the end, we consider that this funding in serving a broader geographical footprint will permit us to assist extra clients internationally, in addition to construct a bigger free money flow-generating shopper enterprise.

Past geographic growth, we have been working to develop our buyer choices throughout some massive, distinctive product retail market segments. Grocery is an $800B market section within the US alone, with the typical family buying three to 4 occasions per week. Amazon has constructed a considerably uncommon, however vital grocery enterprise over almost 20 years. Much like how different mass retailers entered the grocery area within the Nineteen Eighties, we started by including merchandise usually present in grocery store aisles that do not require temperature management similar to paper merchandise, canned and boxed meals, sweet and snacks, pet care, well being and private care, and sweetness. Nevertheless, we provide greater than three million gadgets in comparison with a typical grocery store’s 30K for a similar classes. To this point, we have additionally centered on bigger pack sizes, given the present value to serve on-line supply. Whereas we’re happy with the dimensions and progress of our grocery enterprise, we aspire to serve extra of our clients’ grocery wants than we do right this moment. To take action, we’d like a broader bodily retailer footprint on condition that a lot of the grocery buying nonetheless occurs in bodily venues. Entire Meals Market pioneered the pure and natural specialty grocery retailer idea 40 years in the past. Right this moment, it is a big and rising enterprise that continues to lift the bar for wholesome and sustainable meals. Over the previous 12 months, we have continued to spend money on the enterprise whereas additionally making modifications to drive higher profitability. Entire Meals is on an encouraging path, however to have a bigger affect on bodily grocery, we should discover a mass grocery format that we consider is value increasing broadly. Amazon Contemporary is the model we have been experimenting with for just a few years, and we’re working laborious to determine and construct the fitting mass grocery format for Amazon scale. Grocery is an enormous progress alternative for Amazon.

Amazon Enterprise is one other instance of an funding the place our ecommerce and logistics capabilities place us nicely to pursue this huge market section. Amazon Enterprise permits companies, municipalities, and organizations to acquire merchandise like workplace provides and different bulk gadgets simply and at nice financial savings. Whereas some areas of the economic system have struggled over the previous few years, Amazon Enterprise has thrived. Why? As a result of the group has translated what it means to ship choice, worth, and comfort right into a enterprise procurement setting, continuously listening to and studying from clients, and innovating on their behalf. Some folks have by no means heard of Amazon Enterprise, however, our enterprise clients find it irresistible. Amazon Enterprise launched in 2015 and right this moment drives roughly $35B in annualized product sales. Greater than six million lively clients, together with 96 of the worldwide Fortune 100 firms, are having fun with Amazon Enterprise’ one-stop buying, real-time analytics, and broad choice on a whole bunch of tens of millions of enterprise provides. We consider that we have solely scratched the floor of what is potential thus far, and plan to maintain constructing the options our enterprise clients inform us they want and wish.

Whereas many manufacturers and retailers efficiently promote their merchandise on Amazon’s market, there are additionally a lot of manufacturers and sellers who’ve launched their very own direct-to-consumer web sites. One of many challenges for these retailers is driving conversion from views to purchases. We invented Purchase with Prime to assist with this problem. Purchase with Prime permits third-party manufacturers and sellers to supply their merchandise on their very own web sites to our massive Amazon Prime membership, and provide these clients quick, free Prime transport and seamless checkout with their Amazon account. Purchase with Prime gives retailers a number of extra advantages, together with Amazon dealing with the product storage, choosing, packing, supply, cost, and any returns, all by Amazon Pay and Achievement by Amazon. Purchase with Prime has not too long ago been made out there to all US retailers; and to this point, Purchase with Prime has elevated shopper conversion on third-party buying websites by 25% on common. Retailers are enthusiastic about changing extra gross sales and fulfilling these shipments extra simply, Prime members love that they’ll use their Prime advantages on extra locations, and Purchase with Prime permits us to enhance the buying expertise throughout extra of the net.

Increasing internationally, pursuing massive retail market segments which can be nonetheless nascent for Amazon, and utilizing our distinctive property to assist retailers promote extra successfully on their very own web sites are considerably pure extensions for us. There are additionally just a few investments we’re making which can be farther from our core companies, however the place we see distinctive alternative. In 2003, AWS would have been a basic instance. In 2023, Amazon Healthcare and Kuiper are potential analogues.

Our preliminary efforts in Healthcare started with pharmacy, which felt much less like a significant departure from ecommerce. For years, Amazon clients had requested us after we’d provide them a web-based pharmacy as their frustrations mounted with present suppliers. Launched in 2020, Amazon Pharmacy is a full-service, on-line pharmacy that gives clear pricing, simple refills, and financial savings for Prime members. The enterprise is rising shortly, and continues to innovate. An instance is Amazon Pharmacy’s latest launch of RxPass, which for a $5 per 30 days flat charge, permits Prime members to get as most of the eligible prescription medicines as they want for dozens of widespread circumstances, like hypertension, acid reflux disease, and anxiousness. Nevertheless, our clients have continued to specific a robust want for Amazon to offer a greater different to the inefficient and unsatisfying broader healthcare expertise. We determined to start out with main care as it is a prevalent first cease within the affected person journey. We evaluated and studied the present panorama extensively, together with some early Amazon experiments like Amazon Care. Throughout this course of, we recognized One Medical’s patient-focused expertise as a superb basis upon which to construct our future enterprise; and in July 2022, we introduced our acquisition of One Medical. There are a number of components that clients love about One Medical. It has a improbable digital app that makes it simple for sufferers to debate points with a medical practitioner by way of chat or video convention. If a bodily go to is required, One Medical has workplaces in cities throughout the US the place sufferers can e book similar or subsequent day appointments. One Medical has relationships with specialty physicians in every of its cities and works carefully with native hospital techniques to make seeing specialists simple, so One Medical members can shortly entry these sources when wanted. Going ahead, we strongly consider that One Medical and Amazon will proceed to innovate collectively to alter what main care will seem like for purchasers.

Kuiper is one other instance of Amazon innovating for purchasers over the long run in an space the place there’s excessive buyer want. Our imaginative and prescient for Kuiper is to create a low-Earth orbit satellite tv for pc system to ship high-quality broadband web service to locations world wide that do not at present have it. There are a whole bunch of tens of millions of households and companies who do not have dependable entry to the web. Think about what they’re going to have the ability to do with dependable connectivity, from folks taking on-line schooling programs, utilizing monetary companies, beginning their very own companies, doing their buying, having fun with leisure, to companies and governments bettering their protection, effectivity, and operations. Kuiper will ship not solely accessibility, however affordability. Our groups have developed low-cost antennas (i.e. buyer terminals) that may decrease the limitations to entry. We not too long ago unveiled the brand new terminals that may talk with the satellites passing overhead, and we anticipate to have the ability to produce our commonplace residential model for lower than $400 every. They’re small: 11 inches sq., 1 inch thick, and weigh lower than 5 kilos with out their mounting bracket, however they ship speeds as much as 400 megabits per second. They usually’re powered by Amazon-designed baseband chips. We’re making ready to launch two prototype satellites to check all the end-to-end communications community this 12 months, and plan to be in beta with industrial clients in 2024. The client response to what we have shared up to now about Kuiper has been very optimistic, and we consider Kuiper represents a really massive potential alternative for Amazon. It additionally shares a number of similarities to AWS in that it is capital intensive at first, however has a big potential shopper, enterprise, and authorities buyer base, vital income and working revenue potential, and comparatively few firms with the technical and ingenious aptitude, in addition to the funding speculation to go after it.

One last funding space that I am going to point out, that is core to setting Amazon as much as invent in each space of our enterprise for a lot of a long time to return, and the place we’re investing closely is Massive Language Fashions (“LLMs”) and Generative AI. Machine studying has been a know-how with excessive promise for a number of a long time, however it’s solely been the final 5 to 10 years that it is began for use extra pervasively by firms. This shift was pushed by a number of components, together with entry to greater volumes of compute capability at decrease costs than was ever out there. Amazon has been utilizing machine studying extensively for 25 years, using it in every thing from customized ecommerce suggestions, to achievement middle choose paths, to drones for Prime Air, to Alexa, to the numerous machine studying companies AWS provides (the place AWS has the broadest machine studying performance and buyer base of any cloud supplier). Extra not too long ago, a more moderen type of machine studying, referred to as Generative AI, has burst onto the scene and guarantees to considerably speed up machine studying adoption. Generative AI is predicated on very Massive Language Fashions (educated on as much as a whole bunch of billions of parameters, and rising), throughout expansive datasets, and has radically normal and broad recall and studying capabilities. We have now been engaged on our personal LLMs for some time now, consider it’ll rework and enhance just about each buyer expertise, and can proceed to speculate considerably in these fashions throughout all of our shopper, vendor, model, and creator experiences. Moreover, as we have executed for years in AWS, we’re democratizing this know-how so firms of all sizes can leverage Generative AI. AWS is providing probably the most price-performant machine studying chips in Trainium and Inferentia so small and huge firms can afford to coach and run their LLMs in manufacturing. We allow firms to select from varied LLMs and construct functions with all the AWS safety, privateness and different options that clients are accustomed to utilizing. And, we’re delivering functions like AWS’s CodeWhisperer, which revolutionizes developer productiveness by producing code strategies in actual time. I may write a whole letter on LLMs and Generative AI as I believe they are going to be that transformative, however I am going to go away that for a future letter. Let’s simply say that LLMs and Generative AI are going to be an enormous deal for purchasers, our shareholders, and Amazon.

 
  
So, in closing, I am optimistic that we’ll emerge from this difficult macroeconomic time in a stronger place than after we entered it. There are a number of causes for it and I’ve talked about a lot of them above. However, there are two comparatively easy statistics that underline our immense future alternative. Whereas we’ve got a shopper enterprise that is $434B in 2022, the overwhelming majority of complete market section share in international retail nonetheless resides in bodily shops (roughly 80%). And, it is a comparable story for World IT spending, the place we’ve got AWS income of $80B in 2022, with about 90% of World IT spending nonetheless on-premises and but emigrate to the cloud. As these equations steadily flip—as we’re already seeing occur—we consider our main buyer experiences, relentless invention, buyer focus, and laborious work will end in vital progress within the coming years. And, in fact, this does not embrace the opposite companies and experiences we’re pursuing at Amazon, all of that are nonetheless of their early days.

I strongly consider that our greatest days are in entrance of us, and I sit up for working with my teammates at Amazon to make it so.

Sincerely,

Andy Jassy
President and Chief Govt Officer
Amazon.com, Inc.

P.S. As we’ve got at all times executed, our authentic 1997 Shareholder Letter follows. What’s written there’s as true right this moment because it was in 1997.