Tag: Amazon Web Services

Why Snowflake Stock Soared Today

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Snowflake (NYSE: SNOW) stock made big gains in Friday’s trading. The data technology company’s share price ended the daily session up 9.4%, according to data from S&P Global Market Intelligence.

While there wasn’t any company-specific news driving Snowflake higher today, the company’s valuation benefited from strong earnings results published by leading cloud services providers. In particular, Amazon’s better-than-expected fourth-quarter results helped give Snowflake’s share price a major boost.

Strong cloud demand bodes well for Snowflake

Snowflake is a leading provider of data-warehousing services and related analytics and data management technologies. The company’s Data Cloud platform helps large businesses and organizations combine information that is generated across Amazon, Microsoft, and Alphabet‘s cloud infrastructure services. In turn, strong demand indicators for leading cloud infrastructure providers tend to bode well for Snowflake’s performance.

Amazon’s published its fourth-quarter report after the market closed yesterday. The results showed that the company’s sales had grown 14% year over year to reach $170 billion, coming in significantly ahead of the average analyst estimate for sales of $166.2 billion. Sales for the company’s Amazon Web Services (AWS) division rose 13% year over year to hit $24.2 billion.

Amazon’s strong Q4 report came on the heels of better-than-expected results from Microsoft earlier in the week. For the second quarter of its current fiscal year, which closed at the end of December 2023, Microsoft posted revenue of $62.02 billion and beat Wall Street’s call for sales of $61.12 billion in the period. The software giant’s revenue was up 18% year over year in the period, and sales for its Azure infrastructure business and other cloud services rose 30% year over year.

Is Snowflake stock a buy?

Snowflake stock has seen strong momentum in conjunction with excitement surrounding artificial intelligence (AI) and improving demand outlooks for key cloud businesses. On the one hand, the company’s share price still trades down roughly 46% from the peak that it reached in 2021.

SNOW PS Ratio (Forward) Chart

Valued at roughly 20 times this year’s expected sales, Snowflake has a highly growth-dependent valuation. The company’s valuation profile means that its stock won’t be a great fit for every investor.

On the other hand, Snowflake is growing rapidly and is poised to continue playing an important role in the evolution of analytics and AI services. For risk-tolerant investors, the stock has the makings of a worthwhile portfolio addition, but you should weigh your personal tolerance for volatility before going in heavily on the stock.

Should you invest $1,000 in Snowflake right now?

Before you buy stock in Snowflake, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Snowflake wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of January 29, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Snowflake. The Motley Fool has a disclosure policy.

Why Snowflake Stock Soared Today was originally published by The Motley Fool

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February 2, 2024
Amazon stock pops as earnings beat
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Amazon (AMZN) reported fourth quarter earnings that beat analysts’ expectations Thursday and delivered an optimistic outlook for the months ahead.

The stock climbed almost 7% in premarket trading on Friday.

Net sales came in at nearly $170 billion versus expectations of $166.2 billion. That’s 14% higher than the almost $150 billion the company generated during the same period in the prior year. The outlook for the current quarter also surpassed forecasts, with the company estimating an upper range of $143.5 billion.

“This Q4 was a record-breaking Holiday shopping season and closed out a robust 2023 for Amazon,” said CEO Andy Jassy in the earnings release.

Amazon’s muscular earnings report and subsequent investor response followed more critical receptions to some of its Big Tech siblings, which also largely beat estimates.

Here are some of Amazon’s most significant metrics compared to what Wall Street was expecting in the company’s fiscal fourth quarter, according to data from Bloomberg:
- Revenue: $169.9 billion vs. $166.2 billion expected ($149.2 billion in Q4 2022)
- Adjusted earnings per share: $1.00 vs $0.78 expected ($0.03 in Q4 2022)
- Amazon Web Services: $24.20 billion vs $24.22 billion expected ($21.4 billion in Q4 2022)
- Advertising: $14.7 billion vs. $14.2 billion expected ($11.6 billion in Q4 2022)
On Thursday the company also unveiled a new shopping assistant dubbed Rufus, trained on Amazon’s product catalog and broader information from the web. The generative AI-powered tool can answer customer questions and recommend products on the Amazon mobile app. Amazon said a small subset of customers will initially be able to use the chatbot and then the company will widen its release to more users in the US.

Amazon’s results arrive just weeks after the company eliminated several hundred roles across Prime Video and MGM Studios and announced a major reduction in staff at its video game livestreaming platform, Twitch, laying off more than 500 people. Staff cuts across tech highlight the sector’s painful climb down from an era of rapid expansion, as companies are still resizing and retreating from ambitious investments made during the early stages of the pandemic.

Executives said during the earnings call that it is still early days for deployment of AI products, but that revenues are “accelerating rapidly” as customers express interest in developing AI tools.

CEO Andy Jassy said that every consumer business at Amazon is developing multiple generative AI applications.

The company sees the potential for AI development to generate tens of billions of dollars for its cloud business. AI tools require huge amounts of data and processing power to train and run large language models and their applications, relying on cloud providers to provide vital infrastructure.

Amazon said that capital expenditures will increase in 2024, in large part due to the expansion of its AI operations. Cloud rivals Microsoft (MSFT) and Alphabet (GOOG, GOOGL) both reported double digit capex increases earlier this week.

Amazon began displaying ads on its streaming service Prime Video in recent days. Executives declined to share estimates on the scale of the new ads operation, but noted that expanding advertising on its streaming properties is an important part of its business model to continue investing in content. They anticipate that Prime Video will not present a heavy ad load for audiences, compared to network TV and others services.

Earlier this week Amazon’s streaming service, Prime Video, began playing ads alongside movies and shows as the default option for users, who can pay extra for an ad-free version. Analysts have noted the significant potential for ad growth given the massive scale of Amazon’s built-in audience.

The price of Amazon stock is shown on a screen at the Nasdaq MarketSite, Wednesday, Dec. 20, 2017, in New York. (Mark Lennihan/AP Photo, File) (ASSOCIATED PRESS)

In September, the company launched its AI service, dubbed Amazon Bedrock, which allows customers to build generative AI applications through existing models offered by Anthropic, Stability AI, and Amazon itself.

That same month Amazon also said it would invest up to $4 billion in the AI startup Anthropic as the biggest players in tech scramble for positioning in what they see as the coming age of the technology.

Amazon Web Services, the biggest player in the cloud industry, claims about 30% of market share, followed by Microsoft Azure and Google Cloud. The trio collectively account for roughly two-thirds of the market.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.

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February 2, 2024
Here's the Only Artificial Intelligence (AI) Stock That Warren Buffett and Cathie Wood Both Own As 2024 Begins

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Warren Buffett and Cathie Wood are like two peas in a pod. At least, that’s the case if the pod spanned millions of miles and the two famous investors were on polar ends of it.

The reality is that Buffett and Wood don’t see eye-to-eye on many stocks. However, there’s one notable exception. Here’s the only artificial intelligence (AI) stock that both Buffett and Wood own as 2024 begins.

Small positions for both famous investors

Wood’s Ark Invest portfolio is chock-full of AI stocks. That’s not surprising, considering that Wood has been a vocal proponent of AI for years. It’s a different story with Buffett. The legendary investor is well-known for focusing only on stocks that are in his circle of competence. AI definitely doesn’t fit the bill.

But there is one — and only one — AI stock that both investors own. Admittedly, though, their stakes in this stock are fairly small.

Amazon (NASDAQ: AMZN) makes up 0.4% of Buffett’s Berkshire Hathaway portfolio. While Berkshire initiated a position in Amazon in 2019, Buffett acknowledged at the time that the decision was made by one of the conglomerate’s two investment managers. Still, he likes the company and the stock, telling CNBC, “Yeah, I’ve been a fan, and I’ve been an idiot for not buying.”

Wood’s position in Amazon is even smaller. And the stock isn’t in any of her exchanged-traded funds (ETFs) that focus heavily on AI. Instead, Amazon is included in the Ark Space Exploration & Innovation ETF. The company’s Project Kuiper satellite broadband network apparently caught Wood’s attention.

Amazon’s AI story

Amazon isn’t a johnny-come-lately to the world of AI. The company has developed and used AI for more than two decades.

AI permeates the algorithms used on Amazon’s e-commerce platform. Every time a user sees a recommendation for a product to buy, it’s an example of the company’s AI at work. The e-commerce giant recently upped its game on this front, launching a generative AI tool to answer shoppers’ questions about products.

Amazon introduced its Alexa virtual assistant way back in 2014. Alexa is embedded in the company’s Echo, Firestick, and Kindle Fire devices.

The bigger AI opportunity for Amazon, though, is with its cloud services platform, Amazon Web Services (AWS). CEO Andy Jassy underscored why AWS could be such a big winner in AI in his comments during the company’s third-quarter earnings call. He stated, “[C]ustomers want to bring the [AI] models to their data, not the other way around. And much of the data resides in AWS as the clear market segment leader in cloud infrastructure.”

Is Amazon a smart pick for less well-known investors?

Buffett’s Berkshire Hathaway trimmed its position a little in Amazon in the third quarter of 2023. Wood’s Ark Invest released a report several months ago that downplayed mega-cap AI stocks such as Amazon in favor of smaller up-and-comers. However, I think that there are several reasons to buy Amazon stock right now.

The company’s bottom line continues to improve significantly. Amazon’s management has focused intently on boosting profits by streamlining operations across the board. Those efforts are bearing fruit, as evidenced by earnings more than tripling year over year in 2023 Q3.

Jassy has said in the past that roughly 90% to 95% of global IT spending is still on-premises with the rest in the cloud. He believes those numbers will flip over the next 10 to 15 years. I suspect he’s right. If so, AWS should have massive growth prospects ahead.

Last, but not least, Amazon hasn’t stopped looking for ways to expand into new markets. Just last year, the company launched a supply chain management service, introduced a primary care service for Prime members, and announced that it will sell cars online. I expect more expansions in the future.

My view is that Buffett and Wood would be wise to add to their stakes in Amazon. And I think the AI stock is a smart pick for less well-known investors, too.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of January 16, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Amazon and Berkshire Hathaway. The Motley Fool has positions in and recommends Amazon and Berkshire Hathaway. The Motley Fool has a disclosure policy.

Here’s the Only Artificial Intelligence (AI) Stock That Warren Buffett and Cathie Wood Both Own As 2024 Begins was originally published by The Motley Fool

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January 21, 2024
History Says the Nasdaq Will Surge in 2024: 1 Stock-Split Stock to Buy Before It Does

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An investor raising his hands in celebration while looking at stock charts on a computer.

There’s no doubt that 2022 will go down in history as one of the toughest years on record for Wall Street, but markets appear to have turned the corner. After tumbling more than 35% in 2022, the Nasdaq Composite has rebounded with a vengeance, gaining 39% thus far in 2023 (as of market close on Tuesday).

Investors who are students of history will know the surge will likely continue. As far back as 1972 — the first full year of trading for the Nasdaq — in the year following a market rebound, the tech-heavy index has generated gains of 19% on average, which suggests the current rebound will likely continue.

Furthermore, the resurgence of stock splits in recent year has investors taking a fresh look at companies that have split their shares, as the move is usually preceded by years of robust growth. One such company is Amazon (NASDAQ: AMZN). The stock has gained 677% over the past decade, causing the company to split its shares in mid-2022.

Despite recent challenges, Amazon has a history of strong performance, and the coming year will likely be no different.

Image source: Getty Images.

Late to the AI race or decades early?

Demand for generative artificial intelligence (AI) has spread like wildfire over the past year or so, with many businesses scrambling to adopt these sophisticated algorithms to reap the expected productivity windfall. These AI models have been used to draft and summarize emails, search and condense content, mine data, generate original content, and even write computer code, all of which saves users time and makes them more productive.

There’s been a lot of talk about how Amazon was late to recognize this shift and the accelerating demand for the technology, an uncharacteristic and costly miscalculation. It’s further been suggested that this allowed competitors to get the jump on Amazon, but this belies decades of evidence to the contrary.

Amazon has implemented AI in a broad cross-section of its operations over the years. It uses AI to make product recommendations to customers, to predict inventory levels necessary at its warehouses and distribution centers, to help stock and ship products (with AI-powered robots), and even to set up the most efficient routes for deliveries.

Perhaps most central to the company’s efforts is Amazon Web Services (AWS), which has long provided a host of AI offerings to its cloud computing customers.

Suggesting Amazon is late to the AI party defies logic, and recent developments suggest the company is putting its years of expertise in the field to good use.

Amazon’s far-reaching strategy

Recently, AWS announced the general availability of Bedrock, a service that gives cloud customers access to all the top generative AI models, including those developed by AI21 Labs, Anthropic, Cohere, Meta Platforms, and Stability AI, among others.

Then, of course, there’s Amazon’s own Titan, which offers a family of AI models that have been trained by AWS, supporting a variety of use cases. For example, Titan Image Generator can create original images using voice prompts, much like OpenAI’s DALL-E. These offerings provide cloud users with everything they need to develop their own AI applications, helping bring AI to the masses.

Just last month, Amazon revealed that it would provide access to Nvidia‘s latest state-of-the-art AI chips — the H200 Tensor Core graphics processing units (GPUs). Amazon also announced its new, more energy-efficient Trainium2 and Graviton4 AI processors. This will give its cloud infrastructure customers access to a wide range of AI choices, from the top of the line to more cost-effective options. The company also debuted Amazon Q, a generative AI-powered assistant designed to help automate and streamline mundane and time-consuming tasks for enterprises.

Its cloud unit aside, Amazon is providing generative AI tools to merchants on its e-commerce platform to help create accurate product listings while also debuting AI-powered image generation for customers advertising on its e-commerce platform. Amazon is also deploying generative AI to improve customer purchase recommendations and the search process. Finally, Amazon has taken a page from Microsoft’s own AI playbook, taking a $4 billion minority stake in AI start-up Anthropic — a rival to OpenAI — to further expand its AI chops.

The evidence shows that Amazon is using the next generation of AI to maintain or even improve the competitive advantages in its industry-leading businesses.

All that potential at a bargain

Despite the stock’s significant gains this year, Amazon offers a great deal of opportunity for a surprisingly reasonable valuation. The stock is currently selling for roughly 2.4 times forward sales, a significant discount to its seven-year average of 3.5 times sales.

This gives savvy investors the opportunity to buy all the potential Amazon has to offer at a discount.

Should you invest $1,000 in Amazon right now?

Before you buy stock in Amazon, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of December 11, 2023

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Amazon, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.

History Says the Nasdaq Will Surge in 2024: 1 Stock-Split Stock to Buy Before It Does was originally published by The Motley Fool

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December 17, 2023
3 Unstoppable Artificial Intelligence (AI) Stocks to Buy and Hold for the Next Decade

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artificial intelligence investing algorithms

Sure, there’s a lot of hype surrounding artificial intelligence (AI). It always happens with hot technologies. But don’t think for a second that AI is only a fad. The advances we’ve seen over the last year or so are just the beginning.

As a result, investors still have a tremendous opportunity to make money in the coming years. Here are three unstoppable AI stocks to buy and hold for the next decade (listed in alphabetical order).

1. Alphabet

Anyone who thought that Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) would be left in the dust in the AI race is probably rethinking that position now. Admittedly, the company appeared to be blindsided by the early success of OpenAI’s ChatGPT. And Google Cloud’s less-than-impressive growth in the third quarter was widely chalked up to a perceived AI shortcoming.

However, Alphabet seems to have changed the narrative quite a bit with the introduction of its new Gemini AI model. The most powerful version of the model, Gemini Ultra, outperforms OpenAI’s GPT-4 and beats human experts on the MMLU (massive multitask language understanding) test.

I think that Google Cloud will return to its previous growth trajectory, thanks to Gemini. Even if that’s overly optimistic, the company’s cloud platform should have huge growth prospects as customers flock to the cloud to build generative AI apps.

What about the possibility that Alphabet’s search business could be disrupted by AI? I predict that it will — but not in the way that some envision. My view is that search won’t be replaced by AI. Instead, I expect that Google’s use of AI will enhance its search functionality and make it more profitable.

2. Amazon

Amazon (NASDAQ: AMZN) was another AI leader that appeared to have been initially caught off guard by ChatGPT’s popularity. Like Alphabet, though, the e-commerce and cloud services giant quickly rolled out its own generative AI capabilities.

My take is that Amazon is on the right track with Amazon Bedrock. This service allows Amazon Web Services (AWS) customers to quickly build generative AI apps with a range of tools at their disposal.

I’m also in full agreement with Amazon CEO Andy Jassy about the long-term potential for AWS because of AI. Jassy said in the company’s Q3 conference call, “[C]ustomers want to bring the [AI] models to their data, not the other way around. And most of that data resides in AWS as the clear market segment leader in cloud infrastructure.”

Investors have definitely noticed Amazon’s renewed focus on increasing profitability. I anticipate that those profits will continue to grow robustly for years to come as the company harnesses the power of AI across all of its businesses.

3. Microsoft

My inclusion of Alphabet and Amazon among the unstoppable AI stocks to buy and hold doesn’t mean that I think they’ll grow at the expense of Microsoft (NASDAQ: MSFT). That’s not the case at all. I believe that Microsoft will remain one of the biggest AI winners for a long time to come.

Microsoft’s significant investment in OpenAI could go down as one of the smartest business development moves in corporate history. The two companies are now joined at the hip. And it shows with OpenAI’s GPT-4 technology integrated throughout Microsoft’s products.

I’m not concerned about the recent soap opera with the firing and prompt rehiring of Sam Altman as OpenAI’s CEO. OpenAI — and Microsoft, by extension — will almost certainly continue to pioneer AI breakthroughs.

Like Alphabet and Amazon, Microsoft is poised to profit tremendously as customers move their apps and data to the cloud. AI should also help the Seattle-based tech giant in many other ways, including attracting more customers to its AI-enhanced productivity tools.

Should you invest $1,000 in Microsoft right now?

Before you buy stock in Microsoft, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Microsoft wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of December 11, 2023

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Amazon, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool has a disclosure policy.

3 Unstoppable Artificial Intelligence (AI) Stocks to Buy and Hold for the Next Decade was originally published by The Motley Fool

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December 15, 2023
Amazon beats earning estimates, touts AI as the future

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Amazon (AMZN) enters the AI hype zone.

Shares of the e-commerce beast surged more than 7% on early Friday, after reporting above consensus earnings on Thursday, and supported by bullish comments around artificial intelligence.

CEO Andy Jassy told analysts on the earnings call that AI represents an opportunity worth “tens of billions” for Amazon’s cloud business, Amazon Web Services (AWS). This year, AWS launched its Bedrock AI service, which streamlines the development of large language models.

“Our generative AI business is growing very, very quickly,” said Jassy.

In September, Amazon invested $1.25 billion in Open AI competitor Anthropic. The investment could go up to $4 billion over time.

AI could provide the growth spurt that AWS is looking for. In Q3, the division fell slightly short of analysts’ net sales expectations, coming in at $23.06 billion, against the $23.13 billion Wall Street expected.

However, there were silver linings, as AWS sales were up 12% year-over-year and the division’s operating income is also on the upswing, coming in at $7 billion, a roughly 29% increase from last year. That 12% growth is “just enough to keep the goblins away,” Jefferies analyst Brent Thill wrote on Thursday after earnings.

It’s been a week of mixed cloud results, making Jassy’s comments stick out.

On Tuesday, Microsoft (MSFT) reported better-than-anticipated growth in its Azure cloud business, while Alphabet’s (GOOG, GOOGL) cloud growth numbers disappointed.

AWS growth has been under a microscope this year, and it’s a subject that has been “getting the most airtime with investors,” JPMorgan’s Doug Anmuth wrote before earnings. In a call with media on Thursday, Amazon CFO Brian Olsavsky said that he doesn’t believe AWS growth has stalled completely, instead characterizing the cloud business as in a “delicate” transition.

The company’s slowing down its cost cutting moves, as it looks to serve more customers and increasingly monetize its services.

The earnings rundown

Here are the key numbers that Amazon reported, as compared to analysts’ estimates compiled by Bloomberg:

Net sales: $143.08 billion actual, versus $141.56 billion expected

AWS net sales: $23.06 billion actual, versus $23.13 billion expected

Earnings per share: $0.94 actual, versus $0.58 expected

Operating margin: 7.8% actual, versus 5.46% expected

Q4 net sales: $160-167 billion actual, versus $166.57 billion expected

Currently, analyst recommendations for Amazon come out to 63 Buys, two Holds, and zero Sells.

Looking ahead, keep an eye on those operating margins. Amazon’s operating margins have been increasing — going up 32% between Q1 and Q2, and clocking a notable beat in Q3 — which suggests that Amazon’s post-pandemic efficiency efforts have been working.

“We analyzed ten years of historical data and identified all periods when Amazon’s operating margin either increased or decreased on a basis for two or more consecutive quarters,” wrote Wedbush’s Scott Devitt before earnings. “We then compared share price returns during those periods, and found that on average, Amazon shares have appreciated 84% when operating margins are rising versus just 1% when operating margins are declining.”

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on X, formerly Twitter, at @agarfinks and on LinkedIn.

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October 27, 2023
Cloud migration vital for banking | Bank Automation News

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Cloud migration projects have become increasingly important for the banking industry, offering benefits that can revolutionize how financial institutions operate. In an era in which digital transformation is reshaping the landscape, it is vital for banks to adapt to stay competitive and meet evolving customer expectations. Cloud migration provides a powerful avenue for achieving these goals, enabling banks to leverage advanced technologies, enhance operational efficiency and deliver superior customer experiences.

The banking sector has traditionally been cautious when adopting new technologies, and cloud migration is no exception. The difference is that cloud migration’s benefits far outweigh its challenges. By understanding these challenges and the crucial role cloud migration plays in the survival of legacy institutions, banking professionals can gain insights into the significance of the cloud and the steps required to navigate this journey successfully.

Rambabu Nalagandla, Lead Solutions Architect at Pilvi Systems Inc.

Challenges in migration for banks

Cloud migration for banks presents myriad challenges that demand meticulous attention and strategic planning. One significant hurdle is the initial reluctance to move to the cloud, which stems from data security and compliance concerns. Banks handle vast amounts of sensitive customer data and ensuring its protection during migration is paramount to maintaining trust and confidence.

Migrating complex legacy systems poses another obstacle. These systems often have intricate interdependencies, making their integration with cloud infrastructure a delicate process. Meticulous restructuring and data mapping are required to ensure a seamless transition without disrupting critical functionalities.

Adhering to regulatory requirements is a vital aspect of cloud migration for banks. Financial institutions are subject to stringent regulations imposed by the Financial Industry Regulatory Authority, the Securities and Exchange Commission and other regulators. Banks must ensure compliance to avoid potential legal and financial consequences.

Effective data governance and management are fundamental in addressing these requirements. It is essential for banks to implement robust data governance policies to appropriately classify and protect sensitive data. Data encryption, access controls and continuous monitoring are essential to maintain data integrity and confidentiality during and after migration.

Fostering a culture that embraces cloud technologies is also vital. This involves educating employees about the benefits of cloud adoption, providing training to upskill the workforce, and cultivating a cooperative environment to ensure a smooth transition.

Banks can overcome these challenges by collaborating with experienced cloud service providers and employing best practices. A comprehensive risk assessment, thorough security frameworks, and continuous monitoring are vital to effectively address data security and compliance concerns. With a clear focus on regulatory adherence and a forward-looking approach, banks can unlock the benefits of enhanced agility, cost– efficiency, and improved customer experiences through successful cloud migration.

Accelerating migration journey

Establishing a well-defined strategy is crucial to a successful cloud migration journey. Banks should thoroughly assess their infrastructure, applications and data to identify suitable candidates for migration. Categorizing workloads based on complexity, security requirements and business impact helps prioritize migration efforts effectively. A phased migration approach, starting with noncritical workloads, allows banks to gain valuable experience and build confidence before moving to mission-critical applications.

Collaboration with experienced cloud service providers is another essential aspect of accelerating the migration journey. Industry-leading cloud providers like Amazon Web Services (AWS), Google Cloud Platform (GCP) and Microsoft Azure offer tailored solutions for banks. These can simplify the migration process while ensuring adherence to industry standards and regulations.

For instance, AWS provides the AWS for Financial Services competency, which highlights AWS partners with demonstrated expertise in serving the financial industry. This competency offers various solutions, including core systems modernization, data management and security. One service for banks, Amazon Aurora, offers a fully managed and relational database service. Banks can utilize Amazon Aurora to migrate their on-premises databases to the cloud with minimal downtime, benefiting from improved performance, reliability and cost optimization.

GCP also offers the Financial Services industry, providing tailored solutions for financial institutions. GCP’s BigQuery service offers a powerful database that enables banks to analyze vast amounts of data and derive valuable insights for informed decision making.

Azure offers the Azure Financial Services Accelerator, a platform designed to streamline the development of financial solutions. Azure Key Vault facilitates secure key management and encryption, ensuring robust security for sensitive data during migration and beyond.

Estimating migration costs

Accurately estimating cloud migration costs is key to ensuring a cost-effective process. Banks can utilize cloud cost estimator tools provided by AWS, Azure, and GCP to gain insights into potential expenses based on their existing infrastructure and projected workloads. These tools help banks make informed decisions and plan their migration budgets effectively. Banks must consider data storage requirements, application dependencies, network bandwidth, and data transfer fees when estimating costs. AWS, Azure, and GCP offer pricing options, including pay-as-you-go, reserved instances and volume-based discounts.

Reserved instances allow banks to commit to specific virtual machine types for one- or three-year terms, offering substantial discounts compared to pay-as-you-go rates. Azure offers Reserved VM Instances, while AWS provides Amazon EC2 Reserved Instances. GCP offers sustained use discounts, automatically reducing prices for long-running workloads.

Implementing cost optimization strategies like rightsizing instances, auto scaling and serverless computing helps banks reduce expenses while maintaining optimal performance.

Continuous monitoring and optimization post-migration allow banks to identify cost-saving opportunities and adjust cloud resources. By leveraging cost estimator tools, understanding pricing models, and optimizing expenses through reserved instances and volume-based discounts, banks can navigate cloud migration with financial clarity, enhance cost efficiency and achieve long-term success.

The survival of legacy institutions depends on cloud migration. Emphasizing the advantages of enhanced agility, scalability and improved customer experiences, cloud adoption empowers these institutions to maintain competitiveness, adapt to evolving demands and deliver seamless services in the rapidly changing digital landscape. Embracing cloud technologies enables legacy institutions to unlock new possibilities, optimize operations, and ensure long-term success in an increasingly technology-driven world. It is essential for banks to take the leap and embark on their cloud migration journeys for sustained growth and prosperity.

About the Author:

Rambabu Nalagandla is a lead solutions architect at Pilvi Systems Inc., with more than 19 years of experience in the banking and financial services industry. He has successfully guided leading banks through digital transformation, leveraging emerging technologies to drive operational efficiency and enhance customer experiences.

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August 28, 2023
How Amazon is racing to catch Microsoft and Google in generative A.I. with custom AWS chips

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In an unmarked office building in Austin, Texas, two small rooms contain a handful of Amazon employees designing two types of microchips for training and accelerating generative AI. These custom chips, Inferentia and Trainium, offer AWS customers an alternative to training their large language models on Nvidia GPUs, which have been getting difficult and expensive to procure.

“The entire world would like more chips for doing generative AI, whether that’s GPUs or whether that’s Amazon’s own chips that we’re designing,” Amazon Web Services CEO Adam Selipsky told CNBC in an interview in June. “I think that we’re in a better position than anybody else on Earth to supply the capacity that our customers collectively are going to want.”

Yet others have acted faster, and invested more, to capture business from the generative AI boom. When OpenAI launched ChatGPT in November, Microsoft gained widespread attention for hosting the viral chatbot, and investing a reported $13 billion in OpenAI. It was quick to add the generative AI models to its own products, incorporating them into Bing in February.

That same month, Google launched its own large language model, Bard, followed by a $300 million investment in OpenAI rival Anthropic.

It wasn’t until April that Amazon announced its own family of large language models, called Titan, along with a service called Bedrock to help developers enhance software using generative AI.

“Amazon is not used to chasing markets. Amazon is used to creating markets. And I think for the first time in a long time, they are finding themselves on the back foot and they are working to play catch up,” said Chirag Dekate, VP analyst at Gartner.

Meta also recently released its own LLM, Llama 2. The open-source ChatGPT rival is now available for people to test on Microsoft‘s Azure public cloud.

Chips as ‘true differentiation’

In the long run, Dekate said, Amazon’s custom silicon could give it an edge in generative AI.

“I think the true differentiation is the technical capabilities that they’re bringing to bear,” he said. “Because guess what? Microsoft does not have Trainium or Inferentia,” he said.

AWS quietly started production of custom silicon back in 2013 with a piece of specialized hardware called Nitro. It’s now the highest-volume AWS chip. Amazon told CNBC there is at least one in every AWS server, with a total of more than 20 million in use.

AWS started production of custom silicon back in 2013 with this piece of specialized hardware called Nitro. Amazon told CNBC in August that Nitro is now the highest volume AWS chip, with at least one in every AWS server and a total of more than 20 million in use.

Courtesy Amazon

In 2015, Amazon bought Israeli chip startup Annapurna Labs. Then in 2018, Amazon launched its Arm-based server chip, Graviton, a rival to x86 CPUs from giants like AMD and Intel.

“Probably high single-digit to maybe 10% of total server sales are Arm, and a good chunk of those are going to be Amazon. So on the CPU side, they’ve done quite well,” said Stacy Rasgon, senior analyst at Bernstein Research.

Also in 2018, Amazon launched its AI-focused chips. That came two years after Google announced its first Tensor Processor Unit, or TPU. Microsoft has yet to announce the Athena AI chip it’s been working on, reportedly in partnership with AMD.

CNBC got a behind-the-scenes tour of Amazon’s chip lab in Austin, Texas, where Trainium and Inferentia are developed and tested. VP of product Matt Wood explained what both chips are for.

“Machine learning breaks down into these two different stages. So you train the machine learning models and then you run inference against those trained models,” Wood said. “Trainium provides about 50% improvement in terms of price performance relative to any other way of training machine learning models on AWS.”

Trainium first came on the market in 2021, following the 2019 release of Inferentia, which is now on its second generation.

Trainum allows customers “to deliver very, very low-cost, high-throughput, low-latency, machine-learning inference, which is all the predictions of when you type in a prompt into your generative AI model, that’s where all that gets processed to give you the response, ” Wood said.

For now, however, Nvidia’s GPUs are still king when it comes to training models. In July, AWS launched new AI acceleration hardware powered by Nvidia H100s.

“Nvidia chips have a massive software ecosystem that’s been built up around them over the last like 15 years that nobody else has,” Rasgon said. “The big winner from AI right now is Nvidia.”

Amazon’s custom chips, from left to right, Inferentia, Trainium and Graviton are shown at Amazon’s Seattle headquarters on July 13, 2023.

Joseph Huerta

Leveraging cloud dominance

AWS’ cloud dominance, however, is a big differentiator for Amazon.

“Amazon does not need to win headlines. Amazon already has a really strong cloud install base. All they need to do is to figure out how to enable their existing customers to expand into value creation motions using generative AI,” Dekate said.

When choosing between Amazon, Google, and Microsoft for generative AI, there are millions of AWS customers who may be drawn to Amazon because they’re already familiar with it, running other applications and storing their data there.

“It’s a question of velocity. How quickly can these companies move to develop these generative AI applications is driven by starting first on the data they have in AWS and using compute and machine learning tools that we provide,” explained Mai-Lan Tomsen Bukovec, VP of technology at AWS.

AWS is the world’s biggest cloud computing provider, with 40% of the market share in 2022, according to technology industry researcher Gartner. Although operating income has been down year-over-year for three quarters in a row, AWS still accounted for 70% of Amazon’s overall $7.7 billion operating profit in the second quarter. AWS’ operating margins have historically been far wider than those at Google Cloud.

AWS also has a growing portfolio of developer tools focused on generative AI.

“Let’s rewind the clock even before ChatGPT. It’s not like after that happened, suddenly we hurried and came up with a plan because you can’t engineer a chip in that quick a time, let alone you can’t build a Bedrock service in a matter of 2 to 3 months,” said Swami Sivasubramanian, AWS’ VP of database, analytics and machine learning.

Bedrock gives AWS customers access to large language models made by Anthropic, Stability AI, AI21 Labs and Amazon’s own Titan.

“We don’t believe that one model is going to rule the world, and we want our customers to have the state-of-the-art models from multiple providers because they are going to pick the right tool for the right job,” Sivasubramanian said.

An Amazon employee works on custom AI chips, in a jacket branded with AWS’ chip Inferentia, at the AWS chip lab in Austin, Texas, on July 25, 2023.

Katie Tarasov

One of Amazon’s newest AI offerings is AWS HealthScribe, a service unveiled in July to help doctors draft patient visit summaries using generative AI. Amazon also has SageMaker, a machine learning hub that offers algorithms, models and more.

Another big tool is coding companion CodeWhisperer, which Amazon said has enabled developers to complete tasks 57% faster on average. Last year, Microsoft also reported productivity boosts from its coding companion, GitHub Copilot.

In June, AWS announced a $100 million generative AI innovation “center.”

“We have so many customers who are saying, ‘I want to do generative AI,’ but they don’t necessarily know what that means for them in the context of their own businesses. And so we’re going to bring in solutions architects and engineers and strategists and data scientists to work with them one on one,” AWS CEO Selipsky said.

Although so far AWS has focused largely on tools instead of building a competitor to ChatGPT, a recently leaked internal email shows Amazon CEO Andy Jassy is directly overseeing a new central team building out expansive large language models, too.

In the second-quarter earnings call, Jassy said a “very significant amount” of AWS business is now driven by AI and more than 20 machine learning services it offers. Some examples of customers include Philips, 3M, Old Mutual and HSBC.

The explosive growth in AI has come with a flurry of security concerns from companies worried that employees are putting proprietary information into the training data used by public large language models.

“I can’t tell you how many Fortune 500 companies I’ve talked to who have banned ChatGPT. So with our approach to generative AI and our Bedrock service, anything you do, any model you use through Bedrock will be in your own isolated virtual private cloud environment. It’ll be encrypted, it’ll have the same AWS access controls,” Selipsky said.

For now, Amazon is only accelerating its push into generative AI, telling CNBC that “over 100,000” customers are using machine learning on AWS today. Although that’s a small percentage of AWS’s millions of customers, analysts say that could change.

“What we are not seeing is enterprises saying, ‘Oh, wait a minute, Microsoft is so ahead in generative AI, let’s just go out and let’s switch our infrastructure strategies, migrate everything to Microsoft.’ Dekate said. “If you’re already an Amazon customer, chances are you’re likely going to explore Amazon ecosystems quite extensively.”

— CNBC’s Jordan Novet contributed to this report.

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August 12, 2023
Amazon invests up to $4 billion in Anthropic AI in exchange for minority stake and further AWS integration | CNN Business

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CNN
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Amazon said on Monday that it’s investing up to $4 billion into the artificial intelligence company Anthropic in exchange for partial ownership and Anthropic’s greater use of Amazon Web Services (AWS), the e-commerce giant’s cloud computing platform.

The deepening partnership between the two companies highlights how some large tech firms with massive cloud computing resources are increasingly leveraging those assets to gain a bigger foothold in AI.

As part of the deal, AWS will become the “primary” cloud provider for Anthropic, with the AI company using Amazon’s cloud platform to do “the majority” of its AI model development and research into AI safety, the companies said. That will include using Amazon’s suite of in-house AI chips.

Anthropic also made a “long-term commitment” to offer its AI models to AWS customers, Amazon said, and promised to give AWS users early access to features such as the ability to adapt Anthropic models for specific use cases.

“With today’s announcement, customers will have early access to features for customizing Anthropic models, using their own proprietary data to create their own private models, and will be able to utilize fine-tuning capabilities via a self-service feature,” Amazon said in a release.

Anthropic already offers its models to AWS users through Amazon Bedrock, Amazon’s one-stop shop for AI products. Bedrock also provides access to models from other providers including Stability AI and AI21 Labs, along with proprietary models developed by Amazon itself.

In a release, Anthropic said that Amazon’s minority stake would not change its corporate governance structure nor its commitments to developing AI responsibly.

“We will conduct pre-deployment tests of new models to help us manage the risks of increasingly capable AI systems,” Anthropic said.

Amazon and Anthropic both made commitments to the Biden administration this year to conduct external audits of its AI systems before releasing them to the public.

Amazon’s investment in Anthropic follows similar moves by cloud leaders such as Microsoft. In 2019, Microsoft invested $1 billion in ChatGPT-maker OpenAI. More recently, Microsoft made a $10 billion investment in OpenAI this year and launched a push to bring OpenAI’s technology into consumer-facing Microsoft products, such as Bing.

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August 2, 2023
Microsoft, Amazon facing UK antitrust probe over cloud services | CNN Business

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London
CNN
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Microsoft and Amazon could be in hot water over apparently making it difficult for UK customers to use multiple suppliers of vital cloud services.

The Competition and Markets Authority (CMA), the country’s antitrust regulator, said Thursday it was launching an investigation into the UK cloud infrastructure services market to determine whether players were engaged in anti-competitive practices.

Cloud computing firms, such as Microsoft and Amazon Web Services (AWS), use data centers around the world to provide remote access to computing services and storage. This “cloud infrastructure” forms the foundation for how software applications, such as Gmail and Dropbox, are developed and run.

The CMA probe has been initiated following a report from Britain’s media and communications regulator Ofcom, which found that the supply of cloud infrastructure in the United Kingdom is highly concentrated and competition limited.

“We welcome Ofcom’s referral of public cloud infrastructure services to us for in-depth scrutiny,” CMA CEO Sarah Cardell said in a statement.

“This is a £7.5 billion market that underpins a whole host of online services — from social media to [artificial intelligence] foundation models. Many businesses now completely rely on cloud services, making effective competition in this market essential.”

The CMA said it would conclude its investigation by April 2025.

The probe is the latest evidence of increased scrutiny of big tech companies by European regulators, which have tightened rules in recent years in areas such as data protection and targeted advertising.

The European Digital Services Act, which came into force at the end of August, reflects one of the most comprehensive and ambitious efforts by policymakers anywhere to regulate tech giants. It applies to companies including Amazon (AMZN), Apple (AAPL), Google (GOOG), Microsoft (MSFT), Snapchat, TikTok and Meta (META), the owner of Facebook and Instagram.

According to Ofcom, last year Microsoft and AWS had a combined market share of 70-80% in the UK cloud infrastructure services market. Google is their closest competitor with a share of 5-10%.

In its report, Ofcom identified features of the market that make it more difficult for customers to change providers or to use multiple providers, such as switching fees.

“If customers have difficulty switching and using multiple providers, it could make it harder for competitors to gain scale and challenge AWS and Microsoft effectively for the business of new and existing customers,” Ofcom wrote.

The report also raised concerns about the software licensing practices of some cloud providers, particularly Microsoft.

Both Amazon and Microsoft said they would engage “constructively” with the CMA.

But a spokesperson for AWS added that the company disagreed with Ofcom’s findings. “We… believe they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer,” the spokesperson said, noting that “the cloud has made switching between providers easier than ever.”

A spokesperson for Microsoft added: “We are committed to ensuring the UK cloud industry remains innovative, highly competitive and an accelerator for growth across the economy.”

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August 2, 2023
HSBC Invests in Quantum Computing | Bank Automation News

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HSBC is increasing its investment in quantum computing innovation after teaming up with Quantinuum in May. The $3 billion bank joined a quantum-secured network by BT and Toshiba that will use quantum key distribution (QKD) technology to protect against advanced cyber threats, according to a Wednesday HSBC release. HSBC is “figuring out how to construct […]

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Victor Swezey

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July 7, 2023
Amazon posts 14% growth in AWS revenue | Bank Automation News

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Commerce giant Amazon posted lower-than-expected income in the fourth quarter but saw solid year-over-year growth within its cloud platform, Amazon Web Services. WHY IT MATTERS: The company missed earnings estimates due to both a $2.3 billion loss on electric vehicle manufacturer Rivian and economic uncertainty causing consumers to be more careful with their spending, Chief […]

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Brian Stone

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February 3, 2023
Did #TikTokMadeMeBuyIt Give Amazon the “Social Commerce” Push It Needed?

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Opinions expressed by Entrepreneur contributors are their own.

For a long time, Amazon has been known as a search engine for people ready to buy. Over the last year, with new features such as Amazon Live, they seem to have gradually positioned themselves as a discovery-based platform. That’s traditionally been the realm of search engines such as Google and social media platforms like Instagram, Facebook and TikTok.

It seems that social media platforms and online marketplaces are each heading in each other’s direction. If consumers are lucky, they’ll meet somewhere in the middle and end up making the way that we all shop in 2023 more streamlined and fun.

Related: What Brands Need to Know About Social Commerce

Here’s what I’m really talking about.

Over the last few years, influencer marketing has become a critical (and very valuable) part of online commerce. The influencer marketing business model has exploded from $1.7 billion in 2016 to $13.8 billion in 2021. Industry analysts predict that this year it will reach $16.4 billion.

And where do all those influencers call home? TikTok, that’s where.

OK, not just TikTok, but also other short-video-format heavy platforms such as Facebook and YouTube as well. Accelerated by the restrictions imposed by the long pandemic, they have all contributed to an exciting new way of effortlessly transitioning from social media engagement directly to shopping for favorite, influencer-recommended products.

TikTok signaled their eCommerce intentions with a recent announcement about a new partnership program designed to assist US merchants with advertising on their app by positioning the TikTok For Business Ads Manager as a home base for their TikTok-based marketing.

Related: 3 Ways TikTok Can Improve Your Marketing Strategy

TikTok For Business allows merchants to create and manage TikTok campaigns without leaving their own native eCommerce platforms.

As importantly, they can do it by engaging with users right out at the tip of the spear, those users interacting with high-profile marketing trends.

Now, #TikTokMadeMeBuyIt has become both a trending hashtag and a place where products become viral eCommerce legends.

TikTok for Business is ground zero for influencers and online sellers looking to find what people are talking about, and, more importantly, buying.

The growing #TikTokMadeMeBuyIt hashtag movement doesn’t beg customers to make purchases. Instead, it just shows how cool these trending new products are. And it’s working! TikTok also has a “For You Page” that they say is intended to work as an online “matchmaker” between content and a curated audience.

At the same time, the same thing is happening on Amazon’s marketplace but in reverse!

Amazon just launched Inspire, “a new, personalized in-app shopping feed designed to make it easy to explore new products, discover ideas, and seamlessly shop content created by other customers, influencers, and brands (you) love.”

Sound familiar?

It should. It’s very similar to the experience that a TikTok user would have. Browsers (and not necessarily shoppers) could scroll through curated photos and videos tailored to their selected interests and engagement.

Related: When It Comes to Social Media, TikTok Can Maximize Your ROI

What’s groundbreaking about this new app is Amazon’s seeming willingness to create a platform for users who might not even be interested in shopping. That’s a business model that I’m not sure Jeff Bezos saw on the horizon.

Users of the Inspire app can swipe through the content to simply see what’s out there, get inspired by something new, cool, or crazy, and of course, make purchases with just a few clicks.

Amazon, along with several other large Ecommerce marketplaces, has decided that the long-held acceptance that their platforms were unapologetically for “shopping” had run its course. Now, they’re building entertaining ecosystems that also allow for shopping.

Amazon’s Inspire isn’t available for desktop applications. Instead hinting at the intended functionality as well as the demographic, it’s only available as an app for IOS and Android.

Amazon says it will roll out to select customers in the U.S. in early December, with the projected goal of completing U.S. accessibility completed in a few months.

Marketplace Pulse recently referenced “Prime Day is the best example of social commerce,” with videos tagged #primeday2022 viewed over 52 million times on TikTok.

It seems that very soon, a better representation of “social commerce” might just be groups of Amazon Inspire users passing their phones back and forth, alternately “liking” and making purchases from a marketplace formerly known for its single-minded focus, and let’s admit it, lack of fun.

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Brian Burt

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January 24, 2023