TLDR
- Peter DeSantis, Amazon’s newly appointed AI chief, is prioritizing cost efficiency over cutting-edge performance in AI development.
- The e-commerce giant will leverage proprietary Trainium and Inferentia processors to deliver more affordable AI solutions than competitors.
- While Amazon’s Nova model trails rivals in performance metrics, the forthcoming Nova 2 promises improved competitiveness.
- AMZN shares have declined approximately 8% since the start of the year as investors worry about massive $200 billion infrastructure investments.
- David Luan, who led Amazon’s AGI Lab, revealed his resignation this week.
Amazon is charting a unique course in artificial intelligence: winning through affordability rather than pure technological superiority.
Peter DeSantis, recently elevated to lead Amazon’s AI initiatives, is championing an approach centered on economics. His thesis is straightforward — current AI pricing models are unsustainable, and Amazon has the capability to disrupt them.
“AI has a cost problem,” DeSantis stated. “If we ultimately want AI to transform everything, the costs have to be different.”
DeSantis assumed control of AI operations last December following the exit of former chief AI scientist Rohit Prasad. A nearly three-decade Amazon veteran, he previously spearheaded the development of AWS and the company’s semiconductor division.
Amazon’s share price has tumbled approximately 8% year-to-date. Market participants are growing anxious over the tech giant’s commitment to deploy $200 billion in capital expenditures throughout this year — predominantly for AI-related infrastructure — as financial analysts forecast the company will consume roughly $9 billion in cash during the first quarter.
The stakes for DeSantis couldn’t be higher.
Proprietary Silicon Takes Center Stage
The approach revolves around Amazon-designed semiconductors: Trainium chips for model training and Inferentia processors for inference operations. Amazon maintains these chips deliver up to 50% cost savings compared to equivalent solutions from competitors.
“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 explained.
This economic edge is already resonating with certain clients. Boston-headquartered pharmaceutical research company Nimbus Therapeutics discovered that Amazon’s Nova model delivered accuracy matching Anthropic’s Claude while costing just one-tenth as much.
Additionally, Amazon provides Nova Forge, enabling corporate clients to develop tailored AI models instead of subscribing to premium services like ChatGPT or Gemini.
Amazon’s primary Nova offering has underperformed competitors in independent performance evaluations. The company indicates Nova 2 shows stronger results, though comprehensive third-party benchmark validation remains unavailable.
Amazon’s response to generative AI was notably delayed. Following ChatGPT’s debut in late 2022, the company rushed to formulate a competitive approach, convening urgent leadership meetings.
“Amazon was slower to realize the importance of generative AI,” observed Lloyd Walmsley, senior analyst at Mizuho.
Workforce Challenges and Market Rivalry
Amazon confronts significant talent retention obstacles. Compensation packages for software engineers and research scientists fall short of those offered by Meta, OpenAI, Apple, and Anthropic, based on Levels.fyi data. The organization also eliminated approximately 30,000 corporate positions through two separate workforce reductions.
This Tuesday, David Luan, who directed Amazon’s AGI Lab, confirmed his resignation. The laboratory will remain operational under DeSantis’s supervision.
DeSantis maintains he isn’t pursuing headline-grabbing model launches like OpenAI and Anthropic. He characterized frequent releases as “kind of how you stay in the news” but suggested they don’t necessarily deliver meaningful customer value.
Amazon reports that Nova model variations now process over 70% of Alexa interactions. Its Rufus shopping assistant chatbot served more than 300 million users during 2025.
DeSantis recognized investor apprehension regarding spending levels but defended the strategy, comparing it to skepticism Amazon previously encountered when investing in physical retail infrastructure and subsequently in AWS data centers.
Amazon’s AGI Lab, dedicated to developing AI agents, remains under DeSantis’s leadership following Luan’s departure.
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