Quarter 1
Q2 2026 Earnings Call — July 30, 2026
Doug Anmuth (JP Morgan): Just one for Brian, one for Andy. Brian, many have assumed that AI workloads would be lower margin, at least in your term. Can you just talk about the drivers of the 39% AWS Operating Margin in 2Q and just how we should think about sustainability? And then, Andy, strong Bedrock traction with customers spending more in the quarter than in all the prior quarters combined. But when you think about the full-stack offering, does Amazon need its own leading model toward the frontier? Thank you.
Brian (Management): Yes, we're pleased with the growth in both revenue and also margin expansion that we had in AWS in Q2, especially given the size of our business. You're seeing, despite the large investments, AWS margins have continued to remain strong, and we're up 650 basis points year-over-year, 520 basis points if you exclude the derivative accounting gain that I mentioned. We've said before these margins will fluctuate. They're based on a number of factors, including our investment levels, mix of products, mix of AI versus non-AI. But I would say that the profitability you're seeing from AWS isn't random. It's a result of discipline efficiency gains, capacity optimization, which we've benefited quite a bit from in Q2, and always closely managing our fixed costs. Again, they'll fluctuate, but very strong performance year over year, and we'll take it.
Andy (Management): I'll just add one other thing to what Brian said, which is, as I mentioned in my opening comments, we see the AI business following very much the same type of margin trajectory that we saw in the core business before, and it's a little bit ahead of that pace that we saw. So we're optimistic about that. On the question about Bedrock and our own frontier model, my view of it is that AWS and Amazon can have a wildly successful business without its own frontier model. And a lot of that is because there is not going to be one model to rule the world. You already see that right now. You see it. It's not just Anthropic or it's not just OpenAI. You see increasingly more and more companies being interested in the open models as well. And we have all of them in Bedrock. And it's one of the many reasons why Bedrock is growing so quickly. If you're a company that's building important AI applications, you want to make sure that you have the ability to use all the available models. They're going to each leapfrog each other at different times. They're going to have lots of different models that actually are comparable in capabilities.
And you want that leading selection with the right price performance, and with the right governance and security. And there's nothing like Bedrock that provides that right now. And, you know, we use those models as well. All that said, we are pursuing our own frontier model and we're doing it for a few reasons. First of which is it just gives us additional control over cost, cost for our own consumer applications, but also we're trying to drive costs down for customers. And having a player like ourselves that's always focused on trying to take the price performance and the cost down for customers all the time, we think will help keep the models more cost effective for customers. I think also it allows us to have more control over prioritization of what models focus on. And we have both from our own external customers as well as our internal customers inside the company, certain priorities that matter that we want the models trained especially well for. And then it gives us some control on speed. And so my view of it is that within the next few years, you're going to have at least a half dozen models that are comparably good to each other.
They'll all be in Bedrock and one of them will be ours.
Justin Post (Bank of America): Just thinking about the AWS acceleration, was that really driven by a lot of capacity coming online in the quarter? You guys have been very more open than your peers on gigawatts you're adding. Any help you can give us on how much you might be adding in the second half versus the first half and also how you're thinking about 27? Thank you.
Brian (Management): I think that there are several reasons for why we saw such significant growth, and we're really pleased and excited. Fifth straight acceleration quarter, largest acceleration in 18 quarters. I think there are several things that are driving it. I think the first part is that customers are choosing AWS in part because it has the broadest functionality across both cloud core and AI, in part because it has the strongest operational performance and security, and in part because as more and more companies are bringing their inference workloads to production, they want it to live near the rest of their workloads and data, and so much more of it lives in AWS than anywhere else. I think there are a couple other things going on here on the core side. I mean, AI is obviously growing at a very rapid rate, as we talked about, well over $25 billion in the annual building plans to move to the cloud. And we're winning the lion's share of those with the capabilities I mentioned earlier and the advantages. And then AI is growing at such a rapid rate and it's pulling along core alongside of it.
And that's because the post-training and the reinforcement learning and all the energetic tool use is being driven on CPU and core. And with the leading companies CPU chip and Graviton makes AWS an even more attractive choice. So, yes, we're adding a lot of capacity, but there are a lot of other reasons why it's growing. You know, I expect that we will, you know, we're on pace with the capacity build that we talked about a few quarters ago where we said we expect to have double the capacity, power capacity by the end of 27 that we had in 25 and we continue to be on that track.
Brian Nowak (Morgan Stanley): I have two. Andy, I appreciate the color on the long-lived data centers investments versus the server and network investments. Just the question is, as you sort of look into 2027, you look at the demand that's coming, et cetera, are you at a point where you're going to be able to start to slow that long-lived investment Data Center spend at all in 27? Or is that just too soon where you're still going to have to be opening up new data centers for the next two, three, four years as you look into 27 as number one? Second one, in the past 90 days or so, you've talked, the company's talked publicly about selling Tranium at some point to third-party data centers. How do you think about when you could do that and just sort of the ROIC on that versus core AWS loads?
Andy (Management): Well, on the first question, Brian, we have so much demand right now. Apart from what we've talked about in 26, the lion's share of capacity in 27, and we're adding a lot of capacity, as I mentioned just a few minutes ago, is largely reserved. And we have quite a bit of capacity that's already been reserved for 28. And so I think it's actually kind of useful to look at at least our view of what we see in the demand adoption curve right now, which is we see this adoption curve in AI right now is very barbelled. There is on one end of the barbell, the AI labs are consuming gobs and gobs of compute, and there are a few runaway successful generative AI applications like Cloud Code and ChatGPT. And on the other end of the barbell are enterprises who are getting real value from AI in cost avoidance and productivity. And these are things like automating customer service or business process automation or fraud or things like that. In the middle of the barbell is all of the current enterprise production workloads, some of which are using inference in a pervasive way, but most of which aren't. And that is going to change very significantly over time.
And that will be, in my opinion, that will be the largest absolute segment, the existing production workloads in the enterprise and new businesses and workloads that startups build too. And so I think we're still in the relative early stages of how much demand there's going to be for AI. I think it's going to change every customer experience that we know. I think that it will invent all sorts of new ones that we never imagined. I don't know if the trajectory of that middle part of the barbell will be the same wildly steep trajectory that we've seen with the current barbell AI labs piece, but we have a lot of demand in front of us, and we're going to invest in this business to continue to be the significant market segment leader that we are today. We think, as I mentioned earlier, it has the potential to be a trillion-dollar revenue business for AWS, and we intend on continuing to be the leaders.
Andy (Management): On the question about selling Tranium, we're quite excited about what's happening in our chips business. As I mentioned earlier, it's over $25 billion in annual revenue at this point. We think we have the leading price performance chip in both the AI space with Tranium and in the CPU space with Graviton. The fact that we have multi-year, multi-gigawatt commitments from the two largest AI labs, Anthropic and OpenAI, and more and more companies, as I mentioned in my opening comments, using Tranium is exciting and promising. And we just have an incredible amount of demand for Tranium. There are a lot of customers who are very excited about using it in the form that we're providing right now. We do have an increasing number of customers who are interested in us providing the training and chips to them separate from, you know, even from our cloud. And we're actively having those conversations and exploring, and I expect there's a real chance we'll do that in the future.
Colin Sebastian (Baird): Andy, is it fair to say that there's a more concerted effort to move into the application layer with Kiro and Transform and, I guess, more broadly, plans for workplace productivity tools? And do you see those as sort of providing a boost to the broader platform offering from infrastructure on up? And then, Brian, I mean, just given the demand signals you guys are both talking about and plans for additional capacity, what are your current thoughts on sources of capital for the build-out over the next couple of years? Thank you.
Andy (Management): Hi, Colin. Let me take your second question first. You've seen us issue debt this year. We have a lot of options available to us as we continue to fund this growth that we're seeing in AWS. So we'll continue to look at all the options and make the appropriate decision at the right time. But nothing to share today. And your first question, Colin, we see a very substantial opportunity both for our customers and for AWS in building some of these agentic applications. Some of this is born out of what customers tell us they wish they had and they want to be using. Some of it is born out of just needing to provide those capabilities to ourselves inside Amazon. You know, Kiro, which is our agent of coding service, is an example of that. But Amazon Quick is a really interesting example where we just had so many people inside the company who wanted really an intelligent AI assistant to help them work. You know, at first it started off with, you know, we're a very document-oriented company.
People wanted, when they got documents, not to have to read every document so carefully and to get a summary and then to be able to write their own analyses and responses to these things and to be able to do business intelligence through these agents. And that's really how Amazon Quick started, was to do research, to do business intelligence, to do summarization. And then we had so many people inside the company using it that they said, can't you actually find a way to make it much more productive and easier for us to manage our email, to manage our Slack communications, to manage our calendar, and to use all those things together? And that's really this next instantiation of Amazon Quick. And as I mentioned in my opening comments, it's pretty remarkable not only how fast it's taken off inside Amazon, but how many external enterprises have put it into production with a very large number of people at their companies. We see that opportunity up and down, kind of the different needs of companies.
I think that Connect, Amazon Connect, which is our call center service, which is used by all five major leading airline providers, as well as many of the leading banks and healthcare companies, continues to grow very quickly. AWS Transform, which makes it much easier to migrate software, is super useful for enterprises and the latest one we just launched with Continuum. It's really hard to have a conversation with a large company about AI right now where they don't actually ask you about security with just all the noise and the hype about the security risks with the most current powerful models. Continuum really allows them to use those models productively to find their own vulnerabilities in their code, to design the fixes and to help them deploy them. Those are kind of the first set of them. They all have very high promise, but there are several others that we're working on, and we think that's going to be very helpful for customers and our business.
Jason Helfstein (Oppenheimer & Company):
Ken Goralski (Wells Fargo): Thanks so much, Tim, if I may. First, your RPO reported as two and a half times that of the third quarter of 25 when you gave us the doubling of capacity comments for year end 27. How does that RPO number and the massive expansion there impact your outlook for future capacity? I know that you talked about year end 27, but maybe at least qualitatively, if you could touch upon what the RPO means for 28 and beyond capacity. And then the second one related is you raised your CapEx guidance this year for some supply chain inflation. Could you talk about how your pricing strategy at AWS incorporates future cost inflation? Do your longer term contracts allow for stable return profiles despite cost inflation? Thank you.
Brian (Management): Yeah, I'll start on the backlog number. Yeah, to your point, it's very substantially continuing to grow. I think it's a reflection, again, of customers being very enthusiastic about using AWS both across core and for AI. We have taken in, you know, we know about that backlog, obviously, so that's all taken into account in our CapEx projections. And, you know, over time, I expect that we will continue to sign more deals with customers. And as I mentioned earlier, we're going to pursue the opportunity to continue being the significant market segment leader that we are. On the second question on the supply chain inflation, you know, what I would say is that most of the deals that you sign, other than, you know, there's a certain amount of your demand that is on demand where there aren't contracts. But, you know, a large amount of it tends to be deals and agreements that you've signed. And the deals that you sign, you know, those will be the prices and those will be the agreements that we have over the duration of that contract. And new agreements that you assign, you always take into account what your costs are and how you ultimately build a price that you agree to with your customers. And I think it's no secret right now to any company in the world that there are inflated prices right now on some of the components like memory and hard drives and SSDs.
Eric Sheridan (Goldman Sachs): Thanks so much for taking the question. Maybe pivoting to the commerce business, when you're talking about scaling some of your initiatives around fast commerce and a wide array of supply of groceries and everyday essentials, can you talk a little bit about the signal you're getting from consumers in terms of either adoption rates of those services or what it's doing to overall spend trends and whether there's any countries or geographies where you're seeing different outcomes as you launch and scale some of those services. Thanks so much.
Management: Yeah, we are quite enthusiastic and excited about the pace with which we are growing the amount of everyday essentials as well as perishables in the business right now. Last year was over $150 billion in gross merchandise sales, making us the second largest grocer in the US. I think some of that has to do with the broader selection we have and some of that has to do with just how fast our delivery has gotten over the last two to three years. And when you can deliver items to people, when you have that broad selection like we do at low prices and you can deliver that selection to people as fast as we are right now, people consider you for a lot more of their total purchases and shopping visits. A big chunk of it is our Whole Foods market business, which is the leading organic grocer out there. And if you look at the growth in geographies that Whole Foods markets are in, they're significantly outpacing the growth of comparable grocers. And the profit trajectory continues to trend the right way as well. And we found a new format there in daily shop in urban settings. It's off to an amazing start that we're expanding very rapidly.
And then we always knew that if we wanted to serve the number of customers who want us to serve them and that we want to serve, we had to find a way to offer mass brands and perishables in a significant way. And we've tried lots of experiments over the last few years that we've talked about on this call for a few years. But we have finally found something that is a real needle mover for us in offering perishables in our same day facilities. We’re now able to offer same-day perishables in 2,300 cities around the U.S. If you look in those cities, nine of the top 10 bestsellers in those geographies are perishables. The number of monthly active perishable customers has increased 50% since the start of this year. And for same-day orders with perishables, on average, they average three times more units per order. And so we're just seeing very significant traction in our everyday essentials and in our grocery items. And we're not done experimenting, by the way, with other physical formats in the grocery side, but we've hit on something with same-day perishables in our same-day facilities that's changing the trajectory of our everyday essentials business.
Management: Thank you for joining us on the call today for your questions. A replay will be available on our investor relations website for at least three months. We appreciate your interest in Amazon and look forward to speaking with you again next quarter.
Quarter 2
Q1 2026 Earnings Call — April 29, 2026
first question comes from the line of Eric Sheridan with Goldman Sachs. Please proceed with your question. Thanks so much for taking the question. You know, Andy, across an array of announcements you've made recently with AWS and reflecting upon what you wrote in the shareholder letter, can you talk a little bit about the needed levels of investment over the next couple of years to scale compute and capacity to meet your current state of revenue backlog? and how we should be thinking about your unique approach to custom silicon and AI infrastructure that maybe positions you competitively to build that scale. Thanks so much. Yeah, well, to your point, Eric, we've made a lot of announcements over the last several months, and we're really pleased with the growth that we're seeing in AWS right now. You know, 28% year over year, fastest growth rate in 15 quarters for us, haven't grown at this pace since we were about half the size. And growing 28% on a $150 billion annual run rate basis is not simple to do. And I think there's a few things around it.
You know, first is just, we continue to see people choosing AWS for AI, in part because of our really broad full stack functionality, in part because people want their inferences, they scale it to be close to their data and their applications. So much more of it lives in AWS and elsewhere. And in part because we have the strongest security and operational performance. And that's just what you can see it in our numbers. It's leading to very substantial AI growth. And then at the same time, we're seeing very significant growth in our core business. And some of that are the migrations that have picked up from enterprises, from on-premises to the cloud. But a lot of that is also as AI growth is exploding, it turns out that it leads to a lot of core growth as well. All the post-training, all the reinforcement learning, all the agentic actions and tool usage that these agents are using.
And it fits with what you're asking about on the chip side, which is because we have an unusual collection of chips, we have the leading CPU chip and Graviton, and we have the leading price performance silicon AI chip and Tranium, it means that we're really unusually well position for the inflection that we're seeing and the type of growth that we're experiencing. And so, you know, I don't have an update on a new update on capital. Our plan is largely the same, but we do view this as truly a once in a lifetime opportunity where every application that we know of is going to be reinvented. And there are so many new applications that none of us have ever imagined or dreamed we could build that are starting to be built and will be built And all of that is going to be built on top of AI with a lot of consumption of CPUs and core as well. So I expect that we will invest a significant amount of capital over the coming years to pursue that opportunity and that our customers, our shareholders, and Amazon in general are going to be much better off down the road because we did so. And
the next question comes from the line of Brian Novak with Morgan Stanley. Please proceed with your question. Great. Thanks for taking my questions. I have two. One is on the accounting side. We'll probably get it in the queue, but can you just give us an update on what the AWS backlog looks like and sort of any visibility on the breadth of that backlog beyond the big labs? That's the first one. And then the second one, as you sort of think about milestones for Rufus and agentic commerce for you in 2026, What are you most focused on making sure you accomplish on the agentic side this year just to make sure you stay at the nice edge of the agentic commerce offerings? Thanks. Yeah, on the backlog, the backlog for Q1 is $364 billion. That does not include the recent deal that we announced with Anthropic for over $100 billion. There's reasonable breadth in that as well. It's not just one customer or two customers. On the agentic commerce milestone question, we are very bullish on what agentic commerce will look like. I think it's going to be very good for customers in the long term. I think it'll be good for us too.
And you can see some of that focus from us in what we're building with Rufus. If you haven't checked out Rufus in a while, it's really substantially improved over the last year. And we have a lot of customers using it, as I mentioned Earlier, you see the monthly active users up over 115% in Rufus and the engagement up over 400% year over year. And I think while I think we'll do a lot of work with third-party horizontal agents to try and make that customer experience better. And by the way, I do think today it reminds me in some ways the stage we're in. of what we saw in the early days of search engines, and they're trying to refer business to e-commerce. It's never been a giant part of the referrals to our e-commerce business, but over the years, the experience got better. And what you see with agentic commerce is it's a small fraction of what we see with the search engine referrals, but the experience just hasn't gotten great with these third-party horizontal agents yet. They're not often able to get the pricing right or the product information right. They don't have any personalization data or any shopping history.
And so we do want to see that get better with third-party horizontal agents. We're having conversations with all those folks to try and make that better and find something that works for customers and all the companies. And then it'll be interesting over time which agents customers choose to use. I happen to think that if you're going to a particular retailer that you like to do business with and you like to shop from, if they have a great agentic shopping assistant, you're going to often start there because it's where you're doing your shopping. They have better product information. They have better information about what other customers like you are buying. You can make all sorts of changes to how your account and your shipping information is working there. You know, that's what we're aiming to make Rufus be, is we're aiming to have it be the best shopping assistant anywhere, and I think we're on that path.
Thank you.
The next question comes from the line of Justin Post with Bank of America. Please proceed with your question. Thank you. I'd like to ask two, one on models and then one on perineum chips. So on models, it looks like you might have access to the full suite of OpenAI models on Bedrock. Just wondering how big of an unlock that is and how focused maybe you are on your own NOVA model. And then second, shareholder letter mentioned you might be able to sell racks of Tranium. Just wondering, you know, with your capacity constraints, how do you think about timing of that and how big of an opportunity? Thank you. Yeah, on the models question, I think the fact that we're going to have all of the OpenAI models available in Bedrock is a big deal. It's a big deal for customers. We obviously have a very large amount of AI being done in bedrock today on the models we have. This is Anthropic and Lama and Mistral and a host of others. The one thing you learn over and over again with every technology, who's true in databases, It's true in analytics. It's true in models. It's true in chips, too, by the way, is that customers want choice. There is not one tool to rule the world, and they want choice.
And each of the models are better at some things than the other models. And so people for a long time have wanted to consume open AI models in bedrock. We just enabled yesterday the stateless model, the 5.4 model. and will enable the most recent 5.5 model in the next couple of weeks. And most of the model work and most of the AI has been done in these stateless models, tokens in and tokens out. And while I think there will continue to be lots of work done that way, I think the future of using these models is a stateful model, a stateful API. And that's because when you're building agents, you're building AI applications, you don't want to start anew every time you interact with the model. You want to store state. You want to store identity. You want to store what the conversation or the actions have been. You want to reach out and do a little bit of compute here. You want to have the models reach out to the different tools to accomplish different tasks. That only happens if you're able to store state.
The Bedrock Managed Agents that we collaborated with and invented with OpenAI that we just announced a preview of yesterday is also, I think that's the future of how these agents are going to be built. It's something that nobody else has, and I think it's very exciting to our customers. And of course, we'll have other models like Codex and things like that as well. So I think it's a big deal for customers, and I think it's going to be good for our business as well. On the question about Tranium and the notion of our selling racks over time, I do think that's very much a possibility. You know, always we have to balance. We have such demand right now for Tranium and we have such demand from various companies who will consume as much as we make that we have to decide how much we're going to allocate to the existing demand and customers, how much we're going to save to sell as racks and And for our existing customers that we sell Tranium to, how many will be Tranium plus running on our cloud infrastructure versus just the chips themselves? But I expect over time there's a good chance we're going to sell RACs over the next couple of years. And
the next question comes from the line of Rob Sanderson with Luke Capital Markets. Please proceed with your question. yeah thank you good afternoon and thanks for taking the question um i wanted to ask a little bit about amazon leo um can you maybe help dimensionalize some of the you know the revenue opportunity in the consumer and uh in the enterprise space over the next few years what are the governors on the ramp um could you talk about types of new services that you will be able to develop with the global star infrastructure and the spectrum that maybe you couldn't address before or would take you and you can get to more quickly now and And then how expansive is the longer term vision? I know you're just beginning to launch commercial services, but over the long term, do you expect to include your non-communication services like orbital data centers or things like that as this becomes feasible in the decade ahead? Yeah, I'll try to address as many of those questions as I can. I am very bullish about Amazon Leo and the opportunity there. There are billions of people around the world who do not have access to broadband connectivity.
And there are many thousands of businesses and government assets that people don't have visibility to because they don't have the right connectivity. And it means that those entities can't do a lot of the things that we all take for granted today, including education online, business online, shopping or entertainment online, having constant visibility and digital twins. There's all these things that they can't do today. And so we think that Amazon Leo is going to help solve that problem. I think when we launch our service commercially, and we've got, you know, we just had another launch this week, so we have over 250 satellites in space. When we launch that service commercially, it will be one of two offerings that are on the current technology edge. And I think that we will have a meaningful advantage in performance. I think we'll be about two times better on the downlink than existing alternatives and about six times better on the uplink performance than existing alternatives. I think we'll have a cost advantage for customers.
And then for the governments and the enterprises, and we talked to a lot of them and we have already signed agreements with many of them, even though we haven't launched the service commercially, you know, the latest of which was Delta Airlines. um, committing at least half of their fleet starting in 2028. When you talk to them, another really big part of what matters to them is they're going to want to take this data off of the satellite constellation and they're going to want to store it in the cloud and they're going to want to do analytics on it and they're going to want to do AI on it. And just the combination of Leo with the leading cloud in the world in AWS is very compelling to enterprises and to government. So, you know, I think the, um, are only, you know, today, if you ask what stops us from growing the business, we have to get the constellation into space. We have over 20 launches planned this year. We have over 30 launches planned in 2027. But I think the business has a chance to be a very large, you know, many billion dollar revenue business.
And I think it has some characteristics that are reminiscent of AWS in that it's capital intensive up front where you're committing a lot of capital and cash in the early years for assets that you get to leverage over a long period of time. And so I like the free cash flow and return on invested capital characteristics of that business in the medium to long term. And the last thing I'll say about it is your question about Global Star. Increasingly, what we're finding with consumers and enterprise and governments is that they don't like to have any periods where they don't have connectivity. It just upsets whatever customer experience they're going through. Even in metropolitan areas, we all hit certain parts of the highway or certain roads where you can't get connectivity or you're hiking, you're skiing. And so increasingly, we see very large demand for consumers to have direct-to-device. And that was really the impetus for our acquisition of GlobalStar. They have unusual and scarce global spectrum that's required to provide direct-to-device. We also really like the satellite know-how that we'll get as part of that merger with Global Star.
And then it also afforded us the opportunity to build a deep relationship with Apple, who's going to use our direct device for their iPhones and for their watches. So very optimistic about the business. And
the next question comes from the line of Shweta Kajuria with Wolf Research. Please proceed with your question. Okay, thanks a lot for taking my questions. I wonder, Andy, if you could please talk about, you know, how you're thinking about the increase in price for memory and storage and just the supply chain inflation we're seeing and the impact it could have in capex this year and potentially next year as well. And then on agentic commerce, if you could talk about how you view the opportunity with advertising. I have no doubt that Rufus could be the best shopping assistant available over time. But for advertising opportunity, how do you view that if agents would be the ones taking action to shop? Thanks a lot. So on memory and storage and the supply chain, I think everybody knows that the cost of these components, particularly memory, has skyrocketed. And we're just in a stage where there's just not enough capacity for the amount of demand. We have worked very closely with our strategic partners. We saw this trend happening early, you know, in the kind of the middle of the latter part of last year.
And we've worked with our strategic suppliers here to get, you know, a significant amount of supply. And so we're working very closely with them. I think the team's been very scrappy. I think we've done a good job in making sure that we're not capacity constrained there. But we watch that very closely. You know, one of the interesting things that we see right now with the change in price and in supply on things like memory is that it is a further impetus pushing companies who have on-premises infrastructure into the cloud. And it's because, in meaningful part, these suppliers are prioritizing their very largest customers, which cloud providers are. And so we have seen a number of conversations we've been having with enterprises for many months where it's just been slower in getting the transformation plan to move to the cloud accelerate rapidly just because we have a lot more supply than what others have. So it'll be interesting to see how that evolves over time. We're doing our best to have the supply we need and keep the cost in the right spot, but we'll see how that continues to evolve.
I think on the agentic commerce and how that impacts advertising, I actually believe that we're going to like this for advertising. I think it's going to be good for customers and it's going to be good for our business. I think, first of all, the first thing to remember is the way that our ads team has built tools and agents themselves is making it so much easier to to do advertising. You know, if you look at small, medium-sized businesses that had to take, you know, weeks and months to do creative and to pick the right audience, all of that is just, it's so much faster and so much easier because of our advertising agentic tools. And you no longer have to take as much time or spend as much money building the creative. So I think there are going to be a lot more advertisers with the rise of what's happening in AI. And then if you look at the agentic commerce experiences, if you look at any of these agentic experiences, they tend to be multi-turn conversations where you're not interacting with one search and getting an answer. You tend to find that you're asking questions, you're narrowing questions, it's asking you questions on what you want.
And in that process of having multi-turns, there are multiple opportunities to surface relevant products to customers, many of which will be organic and some of which will be sponsored. And it also gives rise to opportunities like sponsored prompts. And so one of the interesting things that has been very successful for customers in our store has been when they ask certain questions, we give them a number of suggestions that are all created through AI. And we've gotten pretty good at also having sponsored prompts and that mix of questions and prompts that make it easy for people to keep digging deeper into what they're interested in. So I actually believe that advertising will do well in a world of agentic commerce. Thank you. And
our final question comes from the line of Colin Sebastian with Baird. Please proceed with your question. Thanks very much. Good afternoon. Maybe a two-parter, if I could. Andy, first off, just wondering what you're seeing in terms of the trend between incremental AI demand from earlier adopters and larger AWS customers versus maybe how the demand curve is shaping up across the broader enterprise base. And then at a high level, if you think about the use of AI internally across Amazon's businesses, presumably the business overall looks very different in three or four years Maybe, Andy, if you could contextualize where you see the most opportunity for the technology internally, both in terms of product, as well as maybe driving more operating efficiency, I think that would be helpful. Thank you. Yeah. So on what we see in the incremental AI demand from early adopters versus broader enterprise base, I think it's no secret that you've got the AI labs are spending an incredible amount of money on compute at this point, and compute both on the AI side as well as on the core side.
And the models that they're building and the companies that have successful generative AI applications are certainly spending a lot. And there's several of those labs, but We also see quite a bit of enterprise adoption and usage of AI. As I've said before, the largest absolute place that we see enterprises having success is in projects that are around cost avoidance and productivities. These are things like automating customer service or business process automation, fraud, or things of that sort. But the number of projects that we're working with across enterprises and that we're now starting to see come to production around brand new experiences, trying to figure out how to reinvent their current experiences, but using inference and AI to be smarter, also very significant. So we're seeing the adoption of both of those segments. On the use of AI internally and for our current businesses, I think that the shortest First summary I could give you, Colin, is that I do not see a place in any of our businesses or any of the ways that we do work where we're not going to have giant impact on what we do.
I've long had this belief that while you can add incrementally to a lot of your existing customer experiences, different agentic and AI experiences, I really believe that in the fullness of time, and I don't know if that's three years from now or five years from now, or it could be sooner too, that all of these customer experiences we know are going to be completely reinvented. And they're going to have different interfaces. They're going to have different ways that people interact with them. People are going to want to have dialogue with them. And so I think it means that you have to look. It's tricky if you have an existing business that's doing well. but you have to look at every single one of your customer experiences and you have to be able to carve off resource for that team to think anew about what would the future customer experience look like if you started from scratch today and if you had all the technologies like AI available to you when you started. And that is what we're doing in every single one of our experiences. And if I, you know, I have a chance to be involved in some of those and, It's really exciting.
And there are experiences that may take a while for customers to get used to and to use over time. You might find different segments like those AI forward experiences more than others early on. But if you're not actually working on inventing those right now, I think it's going to be very hard to have the business and the experience leadership that we want over a long period of time. So every single one of our consumer businesses, every single one of our businesses in general is working on that. And then I would say internally, I also think that it's going to radically change how we work. It already is. I mean, just look at how coding, agentic coding is changing how we're all building products. I think it's going to have a comparable impact on how we do DevOps and how we do customer service, how we do research, how we do analytics, how sales is conducted. I think every single one of these functions that we all do at work are going to very significantly change. And that's another area of real focus for us. And, you know, we have this experience I mentioned in my letter.
But, you know, if you look at one of our services, we swapped out the engine of the service while we were, you know, also running the service full tilt. And normally that would have taken 40 or 50 people about a year to do. And we took five really smart people, AI forward thinking people building on agentic coding tools. And those five people rebuilt it in 65 days. Like that is a very different world of operating. And that's the world I think we're heading to over the next few years. Thanks for joining us on the call today. And for your questions, a replay will be available on our investor relations website for at least three months. We appreciate your interest in Amazon and look forward to talking with you again next quarter.