Amazon is leaning into a future where software, and not people, are the most critical customers. In its latest earnings call, CEO Andy Jassy emphasized Amazon’s commitment to agentic AI. This comes after recent AWS infrastructure developments like AgentCore and the open-source Strands toolkit, designed to help developers build and scale these agents securely.
While Amazon paints a picture of AI-fueled growth, Wall Street remains wary.
AWS’s 17% cloud growth trailed competitors, and investor concerns led to a 7% after-hours dip in Amazon’s stock.
Despite AWS’s scale, analysts questioned whether it’s losing momentum to faster-growing Microsoft Azure and Google Cloud, which have both made prominent AI investments.
Why It Matters: Amazon is betting that the next major cloud boom will be driven by AI agents making decisions and transactions without human input. As AWS tries to cement itself as the core infrastructure for this future, pressure from rivals and market doubts may force a recalibration of strategy or expectations.
- Software as the New Customer: Amazon is now developing products for autonomous software agents. CEO Andy Jassy described this as a transformational moment where “non-human patrons” will “hit buy” independently. This reframing changes who AWS is building for and how it structures its services.
- AWS Rolls Out Agent-Focused Tools and Infrastructure: To accelerate this new class of AI customers, AWS has released a suite of purpose-built infrastructure tools. Strands, an open-source toolkit, helps developers construct agents, while AgentCore, a newly launched serverless runtime, gives those agents long-term memory, identity, and observability, critical components for production-scale AI. Unlike flashy consumer-facing AI products, Amazon’s approach emphasizes foundational infrastructure, reinforcing its strategy to be the silent backbone of the agentic AI ecosystem.
- Wall Street Challenges Amazon’s AI Momentum: Despite AWS’s massive scale, including $123 billion in annualized revenue, its 17% year-over-year growth has investors concerned, especially compared to Microsoft Azure and Google Cloud’s quicker acceleration. During the earnings call, analysts directly questioned whether AWS is falling behind in the AI race. Jassy argued that AWS’s existing size makes growth difficult to match, and that the AI opportunity is still in its infancy. Yet, generally vague responses and a lack of concrete market-share gains left some analysts unconvinced, leading to a 7% after-hours drop in Amazon’s stock.
- AI Capacity Constraints: One of the largest challenges Jassy cited was power infrastructure. As generative and agentic AI systems demand more energy, AWS is struggling to scale capacity fast enough. This adds a layer of complexity to cloud expansion as growth is expanding beyond adding servers, but also securing enough electricity and physical space to operate them. As AI demands more computing power, Amazon’s capital expenditures on data centers and custom chips like Trainium are expected to remain high through the rest of 2025.
- Consumer AI and Global Headwinds in Focus: On the consumer side, Amazon is testing Alexa+, a generative AI upgrade capable of handling multi-step commands. Early results show higher engagement, hinting at long-term potential for new subscription services or ad revenue. Meanwhile, Jassy addressed concerns over U.S.–China tariffs, noting that while current demand and pricing remain stable, underlying inventory and supply pressures may emerge later in the year. Amazon remains cautious about how these costs may ultimately affect sellers and consumers.
Go Deeper -> Amazon Sees Agentic AI Customers Shaping Future Growth – PYMNTS
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