Amazon.com Inc. Chief Executive Officer Andy Jassy pledged to keep investing in big long-term bets despite cost-cuts and an uncertain economy, moving ahead with a global expansion and efforts to become a bigger player in groceries and healthcare.
(Bloomberg) — Amazon.com Inc. Chief Executive Officer Andy Jassy pledged to keep investing in big long-term bets despite cost-cuts and an uncertain economy, moving ahead with a global expansion and efforts to become a bigger player in groceries and healthcare.
“I’m optimistic that we’ll emerge from this challenging macroeconomic time in a stronger position than when we entered it,” Jassy said Thursday in his second letter to shareholders as CEO.
The missive coincides with a period of rolling layoffs at the Seattle-based company, as executives seek to cut costs and wind down marginal or unprofitable projects. Amazon started cutting jobs in November and laid of thousands more in January. Jassy in March said that after further deliberation more cuts were coming as soon as this month, once managers identify which roles to eliminate. All told, Amazon expects to ax at least 27,000 people.
Amazon also announced plans Thursday to join the generative AI race with technology aimed at cloud customers, as well as a marketplace for AI tools from other companies.
Jassy said that despite slower growth across the company, Amazon still stood to benefit from tailwinds propelling its most important businesses, its online retail franchise and the Amazon Web Services cloud computing arm. About 80% of retail spending is still done in physical stores, and 90% of global corporate technology spending is dedicated to on-site hardware and data centers that AWS is seeking to supplant with its own tools, according to Amazon.
“As those equations steadily flip — as we’re already seeing happen — we believe our leading customer experiences, relentless innovation, and hard work will result in significant growth in the coming years,” Jassy said.
Among the investments highlighted in the letter:
- Healthcare, an arena where Amazon operates a pharmacy and is growing its primary care footprint after acquiring the owner of One Medical
- Kuiper, Amazon’s nascent satellite internet venture
- Grocery, a market that has proved difficult for Amazon to crack. The company paused expansion of its Amazon Fresh mass-market grocery brand to re-evalute the stores.
- Amazon Business, the company’s business sales vertical that Jassy says is on track for $35 billion in annualized gross sales.
- Buy with Prime, Amazon’s effort to offer other companies access to its logistics network for sales on their own websites.
- Generative AI, a technology Jassy says “will transform and improve virtually every customer experience.”
In his shareholder letter a year ago, Jassy pledged to curb injuries in Amazon’s warehouses. He also discussed the thinking behind the company’s big bets and recounted Amazon’s rapid growth during the pandemic. That expansion slowed after people returned to pre-pandemic shopping and streaming habits. Jassy has since said the slowdown and uncertain economic outlook contributed to the decision to roll out record job cuts.
Amazon shares are down about 44% since Jassy succeeded founding CEO Jeff Bezos in July 2021.
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