Amazon\u2019s cloud computing division, AWS, is shifting its focus towards large language models (LLMs) and generative AI-based offerings as it continues to see a downward spiral in overall revenue growth.\n\nAmazon Web Services (AWS) has posted 16% year-on-year growth for the first quarter of fiscal year 2023 on the back of revenue of $21.4 billion. However, this revenue growth is slower compared to the 20%, 27.5%, and 33% growth seen in the fourth quarter, third quarter, and second quarter of 2022, respectively.\u00a0\n\nThe slowdown in growth, according to top executives of the company, can be attributed to enterprises optimizing cloud spend due to uncertain macroeconomic conditions.\n\n\u201cGiven the ongoing economic uncertainty, customers of all sizes in all industries continue to look for cost savings across their businesses, similar to what you\u2019ve seen us doing at Amazon. As expected, customers continue to evaluate ways to optimize their cloud spending in response to these tough economic conditions in the first quarter,\u201d Brian Olsavsky, chief financial officer at AWS, said during an earnings call.\n\n\u201cWe are seeing these optimizations continue into the second quarter with April revenue growth rates about 500 basis points lower than what we saw in Q1,\u201d Olsavsky added.\n\nIn response to the trend, Olsavsky said that AWS\u2019 sales and support teams have continued to spend much of their time helping customers optimize their spending to help them \u201cbetter weather this uncertain economy.\u201d\n\nHowever, AWS top executives remained bullish on the growth perspectives of the division, citing the opportunity around the conversion of on-premises workloads.\n\n\u201cThe new customer pipeline looks strong. The set of ongoing migrations of workloads to AWS is strong. The product innovation and delivery is rapid and compelling. And people sometimes forget that 90-plus percent of global IT spend is still on-premises,\u201d Amazon CEO Andy Jassy said during the call.\n\nAWS shifts focus to generative AI\n\nIn addition, Jassy hinted that the company\u2019s major chunk of cloud business will come from machine learning requirements.\n\n\u201cAnd in my opinion, few folks appreciate how much new cloud business will happen over the next several years from the pending deluge of machine learning that\u2019s coming,\u201d Jassy said.\n\nThe company has already been making capital expenditure adjustments to reroute funds toward the improvement of large language models and generative AI capabilities.\n\nAmazon has been bringing down spending at its fulfillment and transportation divisions year-on-year and has decided to route the savings to AWS to be invested in infrastructure and large language models, Olsavsky said.\n\nAWS\u2019 strategy, according to Jassy, is to target revenue generation by providing compute resources, training capabilities and applications for generative AI and large language models.\n\n\u201cI would say that there\u2019s three macro areas in this space. If you think about maybe the bottom layer here, is that all of the large language models are going to run on compute. And the key to that compute is going to be the chip that\u2019s in that compute,\u201d Jassy said, adding that the company has already launched its Trainium chips and accelerators for memory-intensive tasks, ideal for AI-heavy workloads.\n\nThe second layer, according to Jassy, would be to train foundation models, and AWS has just launched its Amazon Bedrock service that provides multiple foundation models designed to allow companies to customize and create their own\u00a0generative AI\u00a0applications, including programs for general commercial use.\n\nThe third macro area or layer will be offering applications for developers, such as ChatGPT-enabled Copilot from Microsoft-owned GitHub, said Jassy, citing Amazon CodeWhisperer.\n\n\u201cEvery single one of our businesses inside Amazon are building on top of large language models to reinvent our customer experiences, and you\u2019ll see it in every single one of our businesses, stores, advertising, devices, entertainment,\u201d the chief executive added.\n\nOther investments in the first quarter by the cloud computing division include a new region in Malaysia and a second region in Australia.