By Lawrence Nga
When investors talk about the artificial intelligence race, the
conversation usually revolves around one question: Who will build the
best AI model?
Will it be OpenAI? Alphabet? Anthropic? Meta?
That's certainly an important question. But it may not be the most
profitable one for investors. A better question is this: Who stands to
make the most money as AI becomes ubiquitous, regardless of which model ultimately wins?
To answer the question, here's one company that deserves our attention: Amazon (AMZN).
Image source: Getty Images.
Amazon is selling the picks and shovels
History offers useful lessons for investors. During a gold rush, some
prospectors strike it rich, but most leave empty-handed. Still,
businesses that consistently make money during the rush are often the
ones selling the picks, shovels, and supplies.
Today's AI boom looks remarkably similar. Companies are racing to build increasingly capable AI models,
but each one requires enormous computing power, storage, networking,
and software infrastructure. Whether a business chooses OpenAI,
Anthropic, Meta, or another provider, someone still has to run those
workloads.
That's where Amazon Web Services (AWS) comes in. AWS is already one of the world's largest cloud infrastructure providers.
As enterprises deploy more AI applications, demand for computing
resources should continue rising. Every new AI-powered product, AI
agent, recommendation engine, or enterprise assistant represents another
workload that needs infrastructure.
Amazon doesn't have to predict which model will dominate. It simply needs businesses to keep adopting AI.
AI strengthens Amazon's entire ecosystem
The good news for Amazon is that the story doesn't end with Amazon
Web Services (AWS). Unlike many AI-focused companies, Amazon owns an
ecosystem where AI can improve multiple businesses simultaneously.
In e-commerce,
AI can generate more relevant product recommendations, improve
inventory planning, forecast demand, and optimize delivery routes. For
advertisers, AI can deliver better targeting and more efficient
campaigns, helping brands connect with customers who are ready to buy.
Within AWS, Amazon is
developing custom AI chips, such as Trainium and Inferentia, to reduce
the cost of training and running AI models. Lower costs, in turn, could
make AI adoption more attractive to enterprise customers and strengthen
AWS's competitive position.
Each small improvement reinforces another part of Amazon's business.
Better recommendations increase sales. Higher sales attract more
merchants. More merchants attract more advertisers. More business
activity generates additional demand for cloud services and data
processing.
In other words, AI doesn't need to create a new business for Amazon. It's making an already powerful ecosystem even stronger.
Amazon probably doesn't even need to win the AI race
This may be Amazon's biggest strategic advantage, yet it's underappreciated.
Microsoft wants enterprises to embrace Copilot.
Alphabet wants developers and consumers to use Google Gemini. OpenAI
wants ChatGPT to become the default AI assistant.
Those companies have a greater incentive to persuade customers that
their AI model is the best. Amazon has a different objective.
It wants businesses to build, deploy, and scale AI applications on
AWS. Whether those applications use Amazon's own models, Anthropic's
Claude, or another foundation model is often less important than keeping
those workloads inside Amazon's cloud ecosystem.
In other words, Amazon is positioning itself as the platform that
enables AI rather than the destination where users consume it. If AI
adoption accelerates across industries, Amazon could benefit even if
another company builds the world's leading AI model.
But there are still risks
While we have generally explored the upsides so far, that doesn't mean Amazon is guaranteed to win.
Building AI infrastructure requires enormous capital investment --
Amazon plans to invest $200 billion in 2026 -- and those costs could
pressure margins in the near term. Moreover, competition from Microsoft,
Alphabet, and other cloud providers remains intense, so Amazon will
still need to fight for its rightful market share.
In short, execution will still matter.
What does it mean for investors?
The biggest winners of a technological revolution aren't always the
companies with the flashiest products. Sometimes they're the businesses
that make the entire ecosystem possible, and that's the opportunity
Amazon is pursuing.
While much of the market debates which chatbot or AI model will come
out on top, Amazon is quietly building the infrastructure and business
ecosystem that can benefit from almost every AI breakthrough.
And if AI truly becomes as transformative as many expect, Amazon's best days may still lie ahead
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Lawrence Nga
has no position in any of the stocks mentioned. The Motley Fool has
positions in and recommends Alphabet, Amazon, Meta Platforms, and
Microsoft. The Motley Fool has a disclosure policy.
This article was originally published by The Motley fool
