Amazon CEO Andy Jassy told shareholders companies must invest aggressively in AI to stay competitive and he expected the cost of inference to decline.

In a letter accompanying Amazon’s annual shareholder meeting, Jassy explained the company views AI as a rare reinvention opportunity.

“If your mission is to make customers’ lives better and easier every day, and you believe every customer experience will be reinvented by AI, you’re going to invest deeply and broadly”.

“The demand is unlike anything we’ve seen before, and our customers, shareholders, and business will be well-served by our investing aggressively now,” he wrote.

Jassy stated the biggest AI-related expenses are currently data centres and chips, but predicted infrastructure costs would fall over time.

“In AWS, the faster demand grows, the more data centres, chips and hardware we need to procure”, Jassy wrote, noting AI chips “are much more expensive” than CPU silicon.

“We spend this capital upfront, even though these assets are useful for many years.”

The executive noted its Trainium2 chips offer 30 per cent to 40 per cent better price-performance than current GPU-powered compute to highlight how costs ultimately fall.

“We feel strong urgency to make inference less expensive for customers.”

Jassy predicted “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”.

He noted Amazon is building more than 1,000 generative AI applications.

Jassy added Amazon’s AI revenue is growing at triple-digit percentages each year and is a multi-billion-dollar annual revenue run rate.

Amazon unveiled an update to its Alexa voice assistant in February which uses AI to enhance its functionality.

The company also invested about $8 billion into AI start up Anthropic and incorporated its Claude models into the latest version of Alexa.