OpenAI has ChatGPT, Anthropic has Claude, Google has Gemini. But what does Amazon have?
Not a whole lot, it turns out. Unlike its competitors in the tech megacorp scene, Amazon’s standout AI model — organized under the name “Nova” — is about the farthest thing from a household name. And that’s not likely to change anytime soon, because the ecommerce giant is now gutting its in-house AI labs, Bloomberg reports.
Per the outlet, Amazon is scaling back the ambitions of most of its Nova AI models and reorganizing its AI development teams as part of an effort to narrow its focus on “highest priority” goals, after its power-hungry large language models turned out to be a bust.
Accordingly, the company has put most of its AI models on ice, Amazon insiders told Bloomberg. This includes its text-based Nova models, as well as video- and image-generating models, all of which have been placed in a state of “keep the lights on,” meaning they’re technically still supported, but only receive the bare minimum resources needed to sustain them.
Instead, labor and computing power are being diverted toward a singular “frontier-model effort” led by Pieter Abbeel, director of the Berkeley Robot Learning Lab whose robotics company Covariant was hoovered up by Amazon in 2024. At the time Abbeel joined the tech giant, Covariant’s founders were working on AI models for robots, which lines up pretty well with Amazon’s push to automate everything it possibly can.
News of the shift in Amazon’s strategic focus comes a week after it closed one of its key AI offices in San Francisco, an 80-person site specializing in research on artificial general intelligence, the supposed next-level of AI development where the tech obtains human-level intelligence and reasoning skills.
As competition starts dropping dead, we are rapidly approaching the part where the companies who have been weaponizing debt start charging whatever people will pay. The golden days of AI will soon be over. If it makes your devs 10x more efficient, be ready to be charged the price of 5-7 devs.
Back in the 90s, I was working in the record business, on the sales & marketing side.
All these chains of massive big box record/video/book/electronics/computer stores started popping up across America - Best Buy, Circuit City, Media Play, Virgin, Borders, Barnes & Noble, etc. - as well as all the established chains like Recordtown, Camelot, etc. adding big box stores. Every city had at least one of EACH of these chains, if not 2 or 3. Every city, even smaller or mid-size cities, soon had 10 or more Big Box stores spread around, each with massive displays of inventory.
That meant every city had far more inventory than any market could possibly bear. I was in the Classical/Jazz division, and knew that even a “hit” classical record would only sell maybe 50 copies in a city, but now there were 1000 copies in all the stores in that city, and MOST of them would never sell, and would eventually get returned. But I got paid commission on sales, and my commission wasn’t clawed back if it got returned, so I did my job, and sold all that overstock inventory that the Big Boxes demanded, collected my commission, and bought a house.
I knew ALL the major players at the Big Box chains, and they were aware that the situation was unsustainable, but eventually they would run all the others out of business, primarily through predatory loss leader sale pricing, and be the last man standing. That was the strategy that they ALL had, without exception, and it worked. Before long, they all started to close stores.
Today, the only one left is Best Buy, and they don’t even carry music any more, after running every other music store out of business.
The point is, that same Last Man Standing scenario seems to be the strategy here, too. Lots of money will be wasted by companies who blink, and abandon their commitment, or are run out of business because the market simply can’t bear that much competition for limited interest in the product. At least people WANTED music, people are literally HOSTILE toward Data Center products.
I’m actually a bit disappointed that Amazon isn’t going to crash and burn like all these other companies when the bubble bursts :(
Don’t worry, they still have ways to suffer:
During the call, Jassy told investors that Amazon now expects to spend $220 billion in capital expenditures in 2026, up from its prior estimate of $200 billion, due to higher memory costs. Even at the elevated level, however, Jassy said Amazon still won’t “have enough capacity to meet all the demand we have in 2026. And I believe this dynamic will also be true in 2027 too.”
They go into debt to build the compute infrastructure for others. And then that won’t deliver any significant amount of rent, once OpenAi and Anthropic run out of money.
True, but Amazon abandoning their commitment will influence others who are on the fence, and they will quit, too, thus hastening the inevitable crash.
Think of this as the beginning of the end. Amazon still counts as part of it, and they will have lost BILLIONS in the process.
So turn that emoji frown upside down! Amazon took a serious and painful spanking!
Good news
I don’t blame a company for investing a bit of time in trying out a new tech, but it’s good they realized it’s trash before it was too late.
It’s like an energy company that hired climate scientists, and then decided to stop drilling for hydrocarbons and instead shifted to offshore wind
WAIT, you mean not every single LLM company is going to win the LLM race? That in the end it’ll be somewhere between 0 and 3 companies who make big money with a handful of niche players? Who would have thought?
Amazon is playing the medium game.
Pivoting to build up its drone amd space force before attacking.
yet we pay for their failures via our tax dollars… Billionares are the welfare queens.
I’d rather have Democratic Socialism than MAGA Socialism.
I really need the AI bubble to wait two months to pop so that I can get my buy-a-house seed money out of the market.
Umm, bud, get that money out now? It’s commonly advised to not bet anything you need, or use it as a savings account. Especially not now, before it was barely somewhat possible when things were stable, but not now. And with your down payment? Pretty serious stuff to lose just because some jabroni sends a tweet or didn’t bribe the administration enough. Things can go right, yeah, but think about how wrong things can go, and how fast, and how much more likely that is than making… What? 1k or something, at most? Naah, naah. You can just negotiate a better price for the house to make up for the difference.
Amazon has had a huge brain drain going on for the past several years now. They’ve lost a huge portion of senior engineers to competitors and replaced them with people too junior to step into the hole that was left. Amazon is faltering.
Kind of funny in a way.
The ultra wealthy hate normal people that don’t have a mental illness regarding hoarding. They sabotage education so that the populace is stupid and votes for them. Then, they create AI with the hopes of learning from the stupid populace, and it fails because the AI is synthesizing stupidity.
Maybe the stupid MAGAs will be their own downfall
Many LLM labs are shockingly dysfunctional.
Amazon and the useless Nova series is a great example, but Microsoft has its own too. AMD as well.
Europe has a ton of them, labs barely replicating obsolete Llama2 training routines in 2026, but somehow getting tons of taxpayer dollars? Saudi labs doing basically nothing.
I mean… I could follow an off-the-shelf Nvidia Nemotron recipe and do better. Or more sanely, just start with that as a base. And that’s sad; apparently these highly paid labs don’t even follow the space enough to know to do that? What on Earth are they even doing internally?
Have you seen how these tech companies treat their workers? Too many in the field are extremely burnt out to point that they can’t function anywhere near the level required for the technological breakthroughs that the execs are demanding. They want to hire entry to mid-level data scientists for the low pay and then expect them to output the quality of work of a senior data scientist with 10+ years of experience. They’re being set up to fail.
What is the point of creating a new frontier model? Even if you create something that is actually better than the rest (which is hard), it probably won’t be that much better people are going to switch by themselves. Which means you need to heavily discount the price in order to get people to use it at all. This means not only do you need to front the investment to develop the model, and of course all of the marketing costs, but then also running at a loss for at least the first while. And let’s say somehow people go along with you increasing prices once you get people on the platform (which is a big ask) to the point you get a modest profit, the amount of upfront investment would take years and years to make back.
Meanwhile everyone and their uncle is also working on their new frontier model and will be very tempting for your customers to switch to. Especially once you start increasing prices to get profitable. Users have shown very little to no brand loyalty and just use whatever. There’s so many options available and all offer about the same in terms of UI and functionality.
Google is combining their AI stuff with their products, which is good for adoption, but people aren’t willing to pay much for that. Microsoft was really well positioned to bundle it with their stuff, but somehow not only got in hot water with governments over them forcing users to use their AI stuff, but also didn’t get users to use or pay for their AI stuff at all. The same story for others, getting adoption only works with very low prices or even free stuff. Even then it’s hard and people switch quickly once prices go up. Companies are now also much more aware of the price of these things and the lack of ROI, so I would expect spending to go down in the future.
There isn’t much of a point in creating a frontier model, which is why you’re seeing a lot of Silicon Valley pivot if they can.
Google seemed to be comfortable in not being at the bleeding edge, just far enough not to topple its search engine. I wouldn’t be surprised if Google’s AI is cheaper to run than other models.
Meta doesn’t have anything other than social media and can’t seem to make the next big thing.
Microsoft is getting railed because of the collapse in gaming and a major market going towards digital sovereignty. It also doesn’t help that its rollout of Windows 11 was so bad there is now a Linux consumer threat. The problem is that there isn’t anything else for them to sell except AI.
Step 1: Spend tons of money on AI Step 2: Fire 10-20% of total tech workforce Step 3: ? Step 4: Profit (post positive earnings) Step 5: Fire even more employees because your AI solution is failing anyway
Amazon both fired a ton and had a ton of senior people leave, they burned the candle from both ends directly and indirectly and the effects are starting to amplify.
lol
Lmao, even
The shovel industry is booming!!!
Well according to your own link the bubble isn’t going anywhere
Not long as these two companies continue to make bank from this bullshit.
What makes you think that?
First off, the bubble can and will (likely) explode as soon as the rest can no longer buy Nvidia and AMD chips. If anything, what you point out only indicates that these 2 companies may not completely implode when the bubble pops
Second, a lot of the money being passed around circularly comes from Nvidia… they are literally giving money to their clients so they can turn around and buy more chips from them
You seem to confuse market value with profit. These numbers are pretty useless for any gauge of what is really happening.
Nvidia is doing some real shady stuff, like selling GPUs and then renting them back from the companies they sold them to, which inflates their own value. That money doesn’t actually exist, though.
The boom will end and the bubble will burst. Hopefully at least one of those companies goes under. Hopes it’s Google and Meta.
Google is printing so much stupid money that they can still (almost) pay the AI hype from their earnings. Google will (sadly in my opinion) not go under.
They won’t fail, but they will change eventually. Capitalism demands it.
Youtube ads are now unwatchable, they’re trying to wedge people off adblockers but they’ll end up leaving chrome.
Google AI search results cost a LOT more than their classic search results. That’s not a gain in profit.
Everything they’re doing is WAY more expensive and it’s just in the name of trying to prove to investors that they’re in a growth market. AI will stop being allowed to be considered a growth market.
If Youtube isn’t growing, and Gmail isn’t growing and Search isn’t growing, their valuation will plummet.
All of a sudden you’ll see a LOT of firings and a LOT of cost reduction in places that don’t make money.
Oracle is the one that has “bet the farm” so to speak.
Also led by the biggest ahole of the three
It’s a shame Oracle’s downfall couldn’t have happened a decade ago. Ellison has branched out and bought up a bunch of media companies in recent years and is setting up his (somehow even worse) son as heir to his empire, so even if Oracle dies we’re still stuck with the fuckers for the foreseeable future.
He’s been detested for decades now, I’m sure there’s a cohort of greyhair tech workers that’ve been waiting a long time for his downfall. Hopefully he’s leveraged so badly that when the bill comes due, he’ll have to give that shit up and leave us alone.
The moral of the story is to sell the shovels
The shovel sellers (i.e. Nvidia) started lending money to the gold diggers to buy shovels.
And when everybody is rushing to sell shovels, you gotta sell wood and iron.
And when everyone is selling wood and iron, you burn the forest down.
