CNBC’s MacKenzie Sigalos reports on Amazon's 2025 re:Invent conference.

Seattle

Amazon is set to announce its latest artificial intelligence initiatives at the AWS re:Invent conference, amid concerns about its position in the competitive AI and cloud computing sectors. The company has lagged behind rivals such as Google and Microsoft in both AI model benchmarks and the credibility of its custom chips, leading to increased scrutiny from investors and developers.

AWS remains Amazon’s primary profit driver, but recent growth has been outpaced by competitors securing major AI contracts. The conference is seen as a pivotal moment for Amazon to prove it can offer a robust AI stack and protect its market share, with industry watchers anticipating potential announcements regarding new chip designs from AWS leadership.

Amazon looks to flip AI narrative

All right. Meantime Amazon is expected to unveil its latest AI initiatives today at its E.W.S. reinvent conference. Mackenzie Sagalos is at the event and joins us with more now on what to expect. Matt. Hey Mike. So today is a huge test for Amazon. They've been positioning themselves as a full stack player in the A.I. race but so far haven't done much to convince Wall Street with Amazon very much the laggard in the Mag 7 trade this year. Now a big part of that is perception. It's in-house A.I. models still trails on major benchmarks and hasn't found a breakout use case. And then it's custom A.I. chips don't carry the same credibility with developers as Google's in-house TPUs or NVIDIA's GPUs. And that's a big part of why this is an especially pivotal moment for A.W.S. because it's mostly been left out of the in-house A.I. chip conversation while Google Silicon has stolen the spotlight. And in this race owning your own chips is how you really protect margins. And then there's the core cloud business. This is Amazon's cash engine its profit engine. And A.W.S. is still the biggest player but growth only just started to reaccelerate in Q3 after a string of softer quarters and some of the biggest flashiest A.I. contracts have recently started to go to Microsoft Google and even Oracle whose backlogs are growing much faster than A.W.S.. So today the bar is high. This conference is Amazon's chance to convince both developers and investors that it has a credible A.I. stack of its own not just a resale business for NVIDIA guys and Mac. I mean just how high are the stakes in terms of I guess protecting A.W.S.'s existing business. In other words is there a fear that if they don't have a credible offering that can layer on top of of what they already have that it really will increase churn. Or is it all about you know what comes after. So much of this conversation in the cloud wars has become about Google the underdog really coming up the ranks. You've seen that stock rise 65 percent and that's been in tandem with the growth and their Google Cloud business. So they saw an 84 percent jump in backlog last quarter. Now we did see Amazon post that 20 percent growth in revenue year over year. That was a huge moment for them because up until that point they had been pretty much you know stagnant moving forward. And part of that has to do with the in-house chip program. So Google has gained a lot of credibility for that in-house silicon. This TPU it's really well regarded both on the street and among developers. And that hasn't been the same reception the trainee has received. So a lot of people a lot of investors are looking today for something from Mac Garmin the A.W.S. CEO speaking in less than an hour from now perhaps an announcement about new chip design something that would make them especially competitive because that's what's going to be the deciding factor in these cloud wars. Indeed. And we look forward to having him on Mad Money tonight with Jim. That's going to be an important interview as well as your coverage all day. Mack thanks. Mackenzie Segalos.

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