Amazon CEO Andy Jassy’s 2023 shareholder letter

Expensive 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 current reminiscence, and with a few of our personal working challenges as well, we nonetheless discovered a method to develop demand (on prime of the unprecedented progress we skilled within the first half of the pandemic). We innovated in our largest companies to meaningfully enhance buyer expertise brief and long run. And, we made necessary changes in our funding choices and the way in which by which we’ll invent shifting ahead, whereas nonetheless preserving the long-term investments that we imagine can change the way forward for Amazon for patrons, shareholders, and staff.

Whereas there have been an uncommon variety of simultaneous challenges this previous yr, the fact is that for those who function in massive, dynamic, world market segments with many succesful and well-funded opponents (the situations by which Amazon operates all of its companies), situations not often 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, had been a books-only retailer, didn’t have a third-party market, and solely shipped to addresses within the US. Right now, Amazon sells almost each bodily and digital retail merchandise you may think about, with a vibrant third-party vendor ecosystem that accounts for 60% of our unit gross sales, and reaches clients in nearly each nation world wide. Equally, constructing a enterprise round a set of expertise infrastructure providers within the cloud was not apparent in 2003 after we began pursuing AWS, and nonetheless wasn’t after we launched our first providers in 2006. Having nearly each guide 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 may use to entry leisure, management your good house, store, and retrieve all kinds of data.

There have additionally been instances when macroeconomic situations or working inefficiencies have offered us with new challenges. As an illustration, 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 had been making an attempt 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 associated fee 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 had been on to one thing, nevertheless it nonetheless required substantial capital funding. There have been voices inside and outdoors of the corporate questioning why Amazon (recognized principally as an internet retailer then) could be investing a lot in cloud computing. However, we knew we had been inventing one thing particular that would create lots of worth for patrons 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 choice 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 expertise infrastructure. Amazon could be a unique firm if we would slowed funding in AWS throughout that 2008-2009 interval.

Change is all the time across the nook. Typically, you proactively invite it in, and typically it simply comes a-knocking. However, if you see it is coming, it’s important to embrace it. And, the businesses that do that nicely over an extended time frame normally succeed. I am optimistic about our future prospects as a result of I like the way in which our group is responding to the adjustments we see in entrance of us.

Over the past 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 revenue, free money move, and return on invested capital. In some instances, it led to us shuttering sure companies. As an illustration, we stopped pursuing bodily retailer ideas like our Bookstores and 4 Star shops, closed our Amazon Material and Amazon Care efforts, and moved on from some newer units the place we did not see a path to significant returns. In different instances, we checked out some packages that weren’t producing the returns we would hoped (e.g. free transport for all on-line grocery orders over $35) and amended them. We additionally reprioritized the place to spend our assets, which in the end led to the arduous choice to get rid of 27,000 company roles. There are a variety of different adjustments that we have made over the past a number of months to streamline our total prices, and like most management groups, we’ll proceed to guage what we’re seeing in our enterprise and proceed adaptively.

We additionally appeared arduous at how we had been working collectively as a group and requested our company staff to come back again to the workplace no less than three days every week, starting in Could. In the course of the pandemic, our staff rallied to get work completed from house and did the whole lot doable to maintain up with the sudden circumstances that offered themselves. It was spectacular and I am happy with the way in which our collective group got here collectively to beat unprecedented challenges for our clients, communities, and enterprise. However, we do not suppose it is the most effective long-term strategy. We have develop into satisfied that collaborating and inventing is less complicated 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 finest Amazon innovations have had their breakthrough moments from individuals staying behind after a gathering and dealing by means of 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 usually messy. It wanders and meanders and marinates. Serendipitous interactions assist it, and there are extra of these in-person than nearly. It is also considerably simpler to be taught, 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 necessary in our first 29 years as an organization, and I count on it will likely be comparably so within the subsequent 29.

A important problem we have continued to deal with is the rising price to serve in our Shops achievement community (i.e. the associated fee to get a product from Amazon to a buyer)—and we have made a number of adjustments that we imagine will meaningfully enhance our achievement prices and pace of supply.

In the course of the early a part of the pandemic, with many bodily shops shut down, our client enterprise grew at a unprecedented clip, with annual income rising from $245B in 2019 to $434B in 2022. This meant that we needed to double the achievement heart 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 heart community to help with effectivity and pace when objects wanted to traverse lengthy distances)—all within the span of about two years. This was no straightforward feat, and lots of of hundreds of Amazonians labored very arduous to make this occur. Nonetheless, not surprisingly, with that fee and scale of change, there was lots of optimization wanted to yield the supposed productiveness. Over the past 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 features and value 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 adjustments that set us up higher to ship decrease prices and quicker pace for a few years to come back. An excellent instance was reevaluating how our US achievement community was organized. Till lately, Amazon operated one nationwide US achievement community that distributed stock from achievement facilities unfold throughout your complete nation. If an area achievement heart did not have the product a buyer ordered, we would find yourself transport it from different elements of the nation, costing us extra and rising supply instances. This problem grew to become extra pronounced as our achievement community expanded to lots of of extra nodes over the previous couple of years, distributing stock throughout extra places and rising the complexity of connecting the achievement heart and supply station nodes effectively. Final yr, we began rearchitecting our stock placement technique and leveraging our bigger achievement heart footprint to maneuver from a nationwide achievement community to a regionalized community mannequin. We made important inside adjustments (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 manner, whereas nonetheless with the ability to ship nationally when obligatory. A number of the most significant and arduous work got here from optimizing the connections between this huge quantity of infrastructure. We additionally proceed to enhance our superior machine studying algorithms to higher predict what clients in numerous elements of the nation will want in order that we have now the precise stock in the precise areas on the proper time. We have lately accomplished this regional roll out and just like the early outcomes. Shorter journey distances imply decrease price to serve, much less influence 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 monitor to have our quickest Prime supply speeds ever in 2023. General, we stay assured about our plans to decrease prices, cut back supply instances, and construct a meaningfully bigger retail enterprise with wholesome working margins.

AWS has an $85B annualized income run fee, remains to be early in its adoption curve, however at a juncture the place it is vital 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 situations. Whereas some firms would possibly obsess over how they may extract as a lot cash from clients as doable in these tight instances, it is neither what clients need nor finest for patrons 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 may seamlessly scale up; and conversely, if your online business contracts, you may select to provide us again that capability and stop paying for it. This elasticity is exclusive to the cloud, and would not exist if you’ve already made costly capital investments in your individual on-premises datacenters, servers, and networking gear. In AWS, like all our companies, we’re not making an attempt to optimize for anyone quarter or yr. We’re making an attempt to construct buyer relationships (and a enterprise) that outlast all of us; and consequently, our AWS gross sales and assist groups are spending a lot of their time serving to clients optimize their AWS spend to allow them to higher climate this unsure financial system. Many of those AWS clients inform us that they don’t seem to be cost-cutting as a lot as cost-optimizing to allow them to take their assets and apply them to rising and ingenious new buyer experiences they’re planning. Clients have appreciated this customer-focused, long-term strategy, and we expect it will bode nicely for each clients and AWS.

Whereas these short-term headwinds soften our progress fee, we like lots of the basics that we’re seeing in AWS. Our new buyer pipeline is powerful, as are our energetic migrations. Many firms use discontinuous intervals like this to step again and decide what they strategically wish to change, and we discover an rising 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 patrons, AWS continues to ship new capabilities quickly (over 3,300 new options and providers launched in 2022), and spend money on long-term innovations that change what’s doable.

Chip improvement is an efficient instance. In final yr’s letter, I discussed the funding we had been making in our general-purpose CPU processors named Graviton. Graviton2-based compute cases ship as much as 40% higher price-performance than the comparable newest era x86-based cases; 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 supplies). We delivered our first coaching chip in 2022 (“Trainium”); and for the most typical machine studying fashions, Trainium-based cases are as much as 140% quicker than GPU-based cases at as much as 70% decrease price. Most firms are nonetheless within the coaching stage, however as they develop fashions that graduate to large-scale manufacturing, they will discover that many of the price is in inference as a result of fashions are educated periodically whereas inferences are occurring on a regular basis as their related software 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, presents as much as 4 instances larger throughput and ten instances decrease latency than our first Inferentia processor. With the big upcoming progress in machine studying, clients will be capable of get much more completed with AWS’s coaching and inference chips at a considerably decrease price. We’re not near being completed innovating right here, and this long-term funding ought to show fruitful for each clients and AWS. AWS remains to be within the early phases 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 house, 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. Nonetheless, not like bodily retailers, Amazon can tailor these sponsored merchandise to be related to what clients are looking for 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 patrons; and consequently, performs higher for manufacturers. That is a part of why our Promoting income has continued to develop quickly (23% YoY in This autumn 2022, 25% YoY total 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 the most effective place for advertisers to construct their manufacturers. We’ve close to and long-term alternatives that can 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 and marketing 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 spread of first and third-party inputs, in a privacy-safe method, to generate promoting and enterprise insights to tell their broader advertising and marketing and gross sales methods. The Promoting and AWS groups have collaborated to allow firms to retailer their knowledge in AWS, function securely in AMC with Amazon and different third-party knowledge sources, carry out analytics in AWS, and have the choice to activate promoting on Amazon or third-party publishers by means of 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 arduous to assist manufacturers uniquely have interaction with the precise viewers, and develop this a part of our enterprise.

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

Once we take a look at new funding alternatives, we ask ourselves a number of questions:

• If we had been profitable, may it’s large and have an affordable return on invested capital?
• Is the chance being well-served immediately?
• Do we have now a differentiated strategy?
• And, do we have now 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 easy, and others that some people won’t 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 stated for our worldwide Shops growth. In 2022, our worldwide client section drove $118B of income. In our bigger, established worldwide client companies, we’re large enough to be impacted by the slowing macroeconomic situations; nonetheless, 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 influence of FX). Over the previous a number of years, we have invested in new worldwide geographies, together with India, Brazil, Mexico, Australia, numerous European international locations, the Center East, and elements of Africa. These new international locations 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 international locations typically lack a number of the infrastructure and providers that our enterprise depends on (e.g. fee strategies, transportation providers, and web/telecom infrastructure). To unravel these challenges, we proceed to work with numerous companions to ship options for patrons. Finally, we imagine that this funding in serving a broader geographical footprint will permit us to assist extra clients the world over, in addition to construct a bigger free money flow-generating client 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 instances per week. Amazon has constructed a considerably uncommon, however important grocery enterprise over almost 20 years. Just like how different mass retailers entered the grocery house within the Eighties, we started by including merchandise usually present in grocery store aisles that do not require temperature management corresponding to paper merchandise, canned and boxed meals, sweet and snacks, pet care, well being and private care, and wonder. Nonetheless, we provide greater than three million objects 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 price 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 immediately. To take action, we’d like a broader bodily retailer footprint provided that many 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 now, it is a big and rising enterprise that continues to boost the bar for wholesome and sustainable meals. Over the previous yr, we have continued to spend money on the enterprise whereas additionally making adjustments to drive higher profitability. Entire Meals is on an encouraging path, however to have a bigger influence on bodily grocery, we should discover a mass grocery format that we imagine is value increasing broadly. Amazon Recent is the model we have been experimenting with for a number of years, and we’re working arduous to determine and construct the precise mass grocery format for Amazon scale. Grocery is a giant 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 objects simply and at nice financial savings. Whereas some areas of the financial 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, always listening to and studying from clients, and innovating on their behalf. Some individuals have by no means heard of Amazon Enterprise, however, our enterprise clients find it irresistible. Amazon Enterprise launched in 2015 and immediately drives roughly $35B in annualized product sales. Greater than six million energetic 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 lots of of tens of millions of enterprise provides. We imagine that we have solely scratched the floor of what is doable so 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 numerous 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 supply these clients quick, free Prime transport and seamless checkout with their Amazon account. Purchase with Prime supplies retailers a number of extra advantages, together with Amazon dealing with the product storage, choosing, packing, supply, fee, and any returns, all by means of Amazon Pay and Achievement by Amazon. Purchase with Prime has lately been made accessible 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 will 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 belongings to assist retailers promote extra successfully on their very own web sites are considerably pure extensions for us. There are additionally a number of 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 supply them an internet pharmacy as their frustrations mounted with present suppliers. Launched in 2020, Amazon Pharmacy is a full-service, on-line pharmacy that gives clear pricing, straightforward refills, and financial savings for Prime members. The enterprise is rising shortly, and continues to innovate. An instance is Amazon Pharmacy’s current launch of RxPass, which for a $5 per thirty days flat payment, allows Prime members to get as most of the eligible prescription drugs as they want for dozens of widespread situations, like hypertension, acid reflux disorder, and anxiousness. Nonetheless, our clients have continued to precise a powerful want for Amazon to offer a greater different to the inefficient and unsatisfying broader healthcare expertise. We determined to begin with major 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 unbelievable digital app that makes it straightforward 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 guide similar or subsequent day appointments. One Medical has relationships with specialty physicians in every of its cities and works carefully with native hospital programs to make seeing specialists straightforward, so One Medical members can shortly entry these assets when wanted. Going ahead, we strongly imagine that One Medical and Amazon will proceed to innovate collectively to alter what major care will seem like for patrons.

Kuiper is one other instance of Amazon innovating for patrons 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 the moment have it. There are lots of of tens of millions of households and companies who haven’t got dependable entry to the web. Think about what they will be capable of do with dependable connectivity, from individuals taking on-line training programs, utilizing monetary providers, beginning their very own companies, doing their buying, having fun with leisure, to companies and governments enhancing 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 can decrease the limitations to entry. We lately unveiled the brand new terminals that can talk with the satellites passing overhead, and we count on 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 getting ready to launch two prototype satellites to check your complete end-to-end communications community this yr, and plan to be in beta with business clients in 2024. The client response to what we have shared up to now about Kuiper has been very constructive, and we imagine 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 the beginning, however has a big potential client, enterprise, and authorities buyer base, important 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 ultimate funding space that I will point out, that is core to setting Amazon as much as invent in each space of our enterprise for a lot of many years to come back, and the place we’re investing closely is Giant Language Fashions (“LLMs”) and Generative AI. Machine studying has been a expertise with excessive promise for a number of many years, nevertheless 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 elements, together with entry to larger volumes of compute capability at decrease costs than was ever accessible. Amazon has been utilizing machine studying extensively for 25 years, using it in the whole lot from customized ecommerce suggestions, to achievement heart choose paths, to drones for Prime Air, to Alexa, to the various machine studying providers AWS presents (the place AWS has the broadest machine studying performance and buyer base of any cloud supplier). Extra lately, a more recent type of machine studying, known as Generative AI, has burst onto the scene and guarantees to considerably speed up machine studying adoption. Generative AI is predicated on very Giant Language Fashions (educated on as much as lots of of billions of parameters, and rising), throughout expansive datasets, and has radically normal and broad recall and studying capabilities. We’ve been engaged on our personal LLMs for some time now, imagine it would rework and enhance nearly each buyer expertise, and can proceed to take a position considerably in these fashions throughout all of our client, vendor, model, and creator experiences. Moreover, as we have completed for years in AWS, we’re democratizing this expertise so firms of all sizes can leverage Generative AI. AWS is providing essentially the most price-performant machine studying chips in Trainium and Inferentia so small and enormous firms can afford to coach and run their LLMs in manufacturing. We allow firms to select from numerous 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 solutions 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 will go away that for a future letter. Let’s simply say that LLMs and Generative AI are going to be a giant deal for patrons, 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 lots of them above. However, there are two comparatively easy statistics that underline our immense future alternative. Whereas we have now a client enterprise that is $434B in 2022, the overwhelming majority of complete market section share in world retail nonetheless resides in bodily shops (roughly 80%). And, it is a related story for International IT spending, the place we have now AWS income of $80B in 2022, with about 90% of International IT spending nonetheless on-premises and but emigrate to the cloud. As these equations steadily flip—as we’re already seeing occur—we imagine our main buyer experiences, relentless invention, buyer focus, and arduous work will lead to important 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 imagine that our greatest days are in entrance of us, and I stay up for working with my teammates at Amazon to make it so.

Sincerely,

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

P.S. As we have now all the time completed, our unique 1997 Shareholder Letter follows. What’s written there’s as true immediately because it was in 1997.