Key Takeaways
- Amazon’s recently appointed AI chief, Peter DeSantis, is emphasizing cost efficiency over breakthrough performance in the company’s artificial intelligence strategy.
- The e-commerce and cloud computing behemoth plans to utilize custom-built Trainium and Inferentia chips to create AI solutions at significantly reduced prices compared to rivals.
- Amazon’s Nova model lags behind competitors in performance testing, though the forthcoming Nova 2 version shows promise for better outcomes.
- AMZN stock has dropped roughly 8% since early January as investors express concern about the company’s $200 billion capital spending agenda.
- David Luan, former head of Amazon’s AGI Lab, announced his departure from the company earlier this week.
Amazon is pursuing an unconventional strategy in the artificial intelligence race: competing on price rather than raw computational power.
Peter DeSantis, who recently took the helm of Amazon’s AI operations, is driving a strategy focused squarely on economics. His core argument is simple — AI systems are too expensive, and Amazon holds the key to making them accessible.
“AI has a cost problem,” DeSantis stated. “If we ultimately want AI to transform everything, the costs have to be different.”
DeSantis took charge of AI strategy last December after Rohit Prasad, the previous chief AI scientist, departed. With 28 years at Amazon, DeSantis has been pivotal in building both AWS and the company’s chip-making operations.
Amazon’s stock price has dropped approximately 8% since January began. Investors are increasingly nervous about the company’s plans to spend $200 billion on capital expenditures this year — primarily for AI-related infrastructure — while Wall Street projects Amazon will burn through roughly $9 billion in cash during the first quarter.
The pressure on DeSantis is immense.
Custom Silicon as Competitive Advantage
Amazon’s approach centers on homegrown chips: Trainium for training AI models and Inferentia for running them. According to Amazon, these chips can slash costs by up to 50% versus comparable offerings from other vendors.
“If we can build our models on our chips, we can build them at a fraction of the cost of a pure-play AI model provider,” DeSantis stated.
This pricing advantage is already attracting customers. Nimbus Therapeutics, a pharmaceutical research firm based in Boston, found that Amazon’s Nova model matched Anthropic’s Claude in performance while costing only 10% as much.
Amazon also offers Nova Forge, allowing corporate customers to develop custom AI applications rather than paying for premium services like ChatGPT or Gemini.
Amazon’s flagship Nova product has lagged rivals in independent testing. While the company claims Nova 2 shows substantial improvements, independent third-party benchmarks confirming these claims aren’t yet publicly accessible.
Amazon was also late to embrace the generative AI wave. After ChatGPT launched in late 2022, Amazon scrambled to develop a competitive response, holding emergency planning meetings.
“Amazon was slower to realize the importance of generative AI,” observed Lloyd Walmsley, senior analyst at Mizuho.
Talent Exodus and Competitive Pressures
Amazon faces serious challenges retaining top talent. According to Levels.fyi compensation data, pay packages for engineers and researchers lag behind what Meta, OpenAI, Apple, and Anthropic offer. The company also cut approximately 30,000 corporate jobs across two layoff rounds.
Earlier this week, David Luan, who ran Amazon’s AGI Lab, publicly announced he was leaving. The lab will continue functioning under DeSantis’s direction.
DeSantis suggests he’s not chasing splashy model launches like OpenAI and Anthropic. He described frequent announcements as “kind of how you stay in the news” but stressed they don’t always translate to genuine customer benefits.
Amazon claims that Nova model versions now handle more than 70% of Alexa queries. The company’s Rufus shopping assistant chatbot reached over 300 million customers during 2025.
DeSantis acknowledged investor anxiety about spending levels but defended the approach, pointing to similar skepticism Amazon faced when expanding its physical stores and building AWS data centers.
Amazon’s AGI Lab, focused on creating AI agents, continues operating under DeSantis’s management after Luan’s exit announcement.
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