Amazon’s CEO, Andy Jassy, has sparked intense debate among industry observers with his bold projection of earning billions from artificial intelligence (AI) in the coming years. While some view this forecast as a potential turning point for the company, others question the realistic impact of AI on revenue growth.
“AI was a hype in the ’80s and completely died down,” Henry Schellhorn, a professor of mathematics at Claremont Graduate University, told PYMNTS in an interview.
“Now, AI has come up with much more striking products than in the ’80s, such as speech recognition, image recognition, and ChatGPT, and it will be hard to dismiss them. Products that were less innovative and technologically demanding, such as the iPhone, have been phenomenal successes in the last 20 years.”
Amazon is among the companies placing a significant emphasis on AI, unveiling a range of initiatives. The shopping giant’s recent innovations include automated vehicle inspection technology, a generative AI shopping assistant named Rufus, and AI-generated advertising solutions. Jassy seems to view AI as a means to enhance customer experience and drive revenue, forecasting that the company’s generative AI offerings will eventually generate billions in profits.
“Gen AI is and will continue to be an area of pervasive focus and investment across Amazon, primarily because there are few initiatives that give us the chance to reinvent so many of our customer experiences and processes,” he said during a recent earnings call. “And we believe it’ll ultimately drive tens of billions of dollars of revenue for Amazon over the next several years.”
Schellhorn noted that the importance of AI in business depends on the type of industry.
For instance, the finance sector has long relied on quantitative methods and algorithms, meaning the adoption of machine learning there might not represent a dramatic shift. Conversely, in less quantitatively focused fields like law, where computers have played a minimal role beyond quick fact-checking until recently, the impact of AI could be more pronounced.
“However, these are areas where AI, because of its recent progress in language processing, should be growing very fast,” he added.
The most obvious application of AI in consumer products is video games, Schellhorn said. Most video games attract a small segment of the population of young males, especially in the U.S. He said that using AI will make video games much more creative and attract a broader population, increasing revenue.
“So far, the dominant trend in AI seems to ape current human activities in video games: making war, or how to use your budget wisely to make a comfortable house,” he noted. “But in AI, the sky’s the limit: Why should there be wars? Why should there be a fixed budget?”
Generative AI will also serve as a revenue generator for financial technology companies, Mark Sundt, CTO at Stax Payments, told PYMNTS in an interview. He said the most significant immediate impact will be conversational intelligent agents, representing the next generation of chatbots.
“These agents have a twofold advantage for businesses,” he added. “The first is they are able to streamline financial services call centers and provide a more customized and compelling customer experience, potentially leading to greater customer satisfaction and renewal.
“The second is that they present greater opportunities for up-sell and cross-sell of services while interacting with customers across a product suite.”
Not everyone is convinced that AI will keep boosting profits indefinitely. Amid relentless coverage of AI’s benefits, it appears we’ve reached the pinnacle of enthusiasm for the technology, Glenn Hopper, director and CFO of Eventus Advisory Group, told PYMNTS in an interview.
“There are going to be winners and losers in this new AI space — just as there were in the home video market (VHS vs. Betamax) or in the dotcom boom (anyone remember pets.com?),” he added. “But I don’t think anyone can debate the transformative power of this technology.”
In an interview, wealth management adviser Eric Croak told PYMNTS that AI may be overhyped as a revenue driver. The industry is still in the nascent stages of this technology, and numerous challenges remain to be addressed.
“The thing is, using AI to generate revenue is more of an exception than a norm, which is surprising considering the widespread use of AI in everyday applications like machine translation services, virtual assistants, and automated manufacturing,” he added.
Many companies are engaging in “AI washing” by branding their products with AI capabilities and making exaggerated claims about their technological advancements, Hopper said.
“There’s a delicate balance between AI’s potential and the current perception of its capabilities,” he added. “Don’t let the hype surrounding AI today overshadow the complexity of real-world application and the substantial investments required in data infrastructure and skilled personnel.”
Some common missteps could be overestimating AI’s immediate impact, assuming it’s a quick fix for revenue growth, and overlooking the ethical implications of its deployment, Hopper said. On the other hand, dismissing AI as mere hype undercuts its proven value across numerous sectors.
“The critical stance for businesses today isn’t to question AI’s validity as a revenue driver but to figure out how to strategically integrate it within existing frameworks,” he added. “Look at pilot programs that yield tangible benefits and scaling based on expertise — not buzzwords.”
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