Amazon.com Inc.’s third-quarter earnings demonstrate its Amazon Web Services Inc. unit’s financial strength and its role as a cornerstone for Amazon’s overall financial health.

Key results were more on the cost-cutting side than the revenue side. Generative artificial intelligence is the big focus. Because of the late entry into the generative AI marketing war and lost ground to Microsoft Azure in thought leadership, AWS is aggressively pushing its generative AI story.

AWS has lots of work to do to convert its partner ecosystem leadership into AI-backed strategic partnerships and client engagements. It’s expected to continue its effort in laying the groundwork for the “long game” of the cloud wars and the next phase of cloud computing where AI will be the expectation in all aspects of cloud workloads.

As enterprises across sectors evaluate AI-driven solutions, the focus on production workloads will be the top concern for AWS. Its investments in AI tools, infrastructure and partnerships position it favorably against competitors.

AWS has shown some improved momentum in the area of generative AI. The unveiling of Amazon Bedrock demonstrates its focus on innovation in the AI domain. Notably, several major enterprises such as Adidas, Booking.com, GoDaddy, and others have begun using AWS for their generative AI workloads. AWS’ partnership with Anthropic, a leading player in generative AI, is indicative of the platform’s push toward becoming the preferred cloud provider for major AI initiatives. The collaboration will see Anthropic build and deploy future AI models on AWS, offering new generative capabilities for developers and customers.

We at theCUBE Research are watching how AWS competes in the enterprise against Microsoft and who has a stronger AI story and more enterprise relationships in a transforming IT market. Additionally, we are evaluating AWS’ approach to entering new markets and its ability to drive innovations that resonate with a broad range of industry verticals.

My outlook and recommendation: Even with increased competition from other clouds, I maintain a positive outlook on AWS, expecting the company to take a “long game” approach to sustained growth and increased market influence in the forthcoming quarters. I expect AWS to “level up” in its generative AI capabilities and sharpen its AI positioning and messaging to be simpler, clearer and aligned with the new generative AI expectations from their customers.

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