Despite Cost Cuts, Amazon CEO Pledges To Keep Investing In Big Bets

As an Amazon executive, Andy Jassy vowed to continue investing in big long-term bets despite the fact that the economy is uncertain and cost-cutting measures are being taken, noting that the company will still expand globally and create a company that is a bigger player in groceries and healthcare as well. 

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Trade Algo reported that Jeff Jassy, the CEO of the firm, had written his second letter to shareholders as director in which he expressed optimism that the company would emerge from this challenging macroeconomic period stronger than when it entered it.  

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As executives at the Seattle-based company try to cut costs and wind down marginal or unprofitable projects during a period of rolling layoffs, the missive coincides with a period of rolling layoffs at the company. It was announced in November that Amazon would begin cutting jobs, and thousands more were laid off in January, as well. It was Jassy's prediction that more cuts would be announced this month after further deliberation, once managers were able to identify which roles to cut. All told, Amazon expects to lay off at least 27,000 employees in the next few months. 

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Aside from announcing plans Thursday to compete in the generative AI race, Amazon also announced that it would launch a marketplace for artificial intelligence tools from other companies and join the generative AI race.

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It has been reported that although Amazon has seen a slowdown in growth throughout the company, the company remains poised to benefit from tailwinds propelling its most important businesses, including the online retail franchise and the cloud computing division of the company. The number of retail purchases is still about 80%, and 90% of global IT spending is related to on-site hardware and data centers, which Amazon claims it wants to replace with its own tools. AWS is trying to disrupt this market with its own tools. 

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Jassy says that they believe their leading customer experiences, relentless innovation, and hard work in the coming years will lead to considerable growth as those equations gradually flip - as we are already seeing happen - as their equations steadily flip, as they are already doing.  

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As part of the letter, the following investments are highlighted:

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• Among the many areas that Amazon operates in, healthcare is one of them. The company owns a pharmacy and is expanding its footprint in primary care after acquiring One Medical Care and its assets

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• The nascent satellite internet company Kuiper has just been launched by Amazon

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• Despite its initial success, Amazon has had trouble cracking the grocery market and has paused expansion of its Amazon Fresh mass-market grocery brand. It re-evaluated its stores and is currently working on a new approach.

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• Currently, Amazon Business, the company's business sales vertical, has a gross product volume of approximately $35 billion in annual revenue per year according to Jassy.

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• A new way for other companies to sell their own items is through Amazon's Amazon Prime program, in which Amazon offers access to its logistics network for suppliers.

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• Using generative AI, Jassy predicts that virtually every aspect of the customer experience will be transformed and improved as a consequence.

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As part of his shareholder letter of a year ago, Jassy promised to curb injuries in Amazon's warehouses, as well as discuss the reasoning behind Amazon's big bets and explain Amazon's rapid expansion during the pandemic. Jassy stated that the slowdown and uncertain economic outlook were factors that contributed to the decision to cut record numbers of jobs. However, that expansion slowed as people returned to their pre-pandemic shopping and streaming habits.  

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There has been a 44% drop in Amazon shares since Jassy succeeded Jeff Bezos in July 2021, when he succeeded Jeff Bezos as founding CEO.