Key Takeaways
- Peter DeSantis, Amazon’s newly appointed AI leader, is pursuing a cost-focused approach to compete in the artificial intelligence market.
- The company is leveraging proprietary Trainium and Inferentia chips to develop AI models more affordably than competitors.
- While Amazon’s Nova model hasn’t topped performance benchmarks, the upcoming Nova 2 version promises improved competitiveness.
- Shares of Amazon have declined approximately 8% since the start of the year amid worries over $200 billion in planned capital investments.
- David Luan, who led Amazon’s AGI Lab, revealed his exit from the company this week.
Amazon is charting a different course in artificial intelligence: competing on affordability rather than simply chasing cutting-edge performance.
As Amazon’s freshly named AI chief, Peter DeSantis is championing a cost-centric approach. His fundamental thesis is straightforward — artificial intelligence carries an unsustainable price tag, and Amazon possesses the capability to fix it.
“AI has a cost problem,” DeSantis stated. “If we ultimately want AI to transform everything, the costs have to be different.”
DeSantis assumed leadership of AI initiatives last December following the exit of former chief AI scientist Rohit Prasad. The 28-year company veteran previously played a pivotal role in developing AWS and Amazon’s semiconductor division.
Amazon’s shares have declined about 8% year-to-date. Market participants express concern over the tech giant’s planned $200 billion capital expenditure allocation for this year — predominantly directed toward AI infrastructure — while financial analysts estimate the company will consume approximately $9 billion in cash during the first quarter.
The stakes for DeSantis couldn’t be higher.
Proprietary Silicon at the Core
The strategy revolves around Amazon’s internally developed semiconductors: Trainium chips for model training and Inferentia chips for inference workloads. The company asserts these processors deliver up to 50% cost savings compared to competing solutions.
“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 pricing advantage is already winning over clients. Nimbus Therapeutics, a Boston-based pharmaceutical research company, discovered that Amazon’s Nova model delivered comparable accuracy to Anthropic’s Claude while costing just one-tenth as much.
Additionally, Amazon provides Nova Forge, enabling corporate clients to construct tailored AI models instead of subscribing to premium services like ChatGPT or Gemini.
Amazon’s primary Nova model has underperformed rivals in independent performance evaluations. The company maintains that Nova 2 delivers superior results, though independent benchmark verification remains unavailable.
Amazon also responded slowly to the generative AI revolution. Following ChatGPT’s debut in late 2022, the e-commerce giant convened urgent strategy sessions to formulate its response.
“Amazon was slower to realize the importance of generative AI,” noted Lloyd Walmsley, senior analyst at Mizuho.
The Talent Equation
Amazon confronts workforce retention obstacles as well. Compensation for software engineers and research scientists at the company lags behind Meta, OpenAI, Apple, and Anthropic, per Levels.fyi data. The organization also eliminated roughly 30,000 corporate positions through two separate workforce reductions.
This Tuesday brought news that David Luan, who headed Amazon’s AGI Lab, would be departing the company. The laboratory will remain operational under DeSantis’s supervision.
DeSantis maintains he’s not pursuing headline-grabbing product launches like OpenAI and Anthropic. He described frequent releases as “kind of how you stay in the news” while suggesting they don’t necessarily deliver meaningful customer value.
According to Amazon, variants of its Nova model now process over 70% of Alexa queries. The company’s Rufus shopping assistant chatbot attracted more than 300 million users throughout 2025.
DeSantis recognized investor apprehension regarding capital spending but defended the strategy, drawing comparisons to earlier skepticism Amazon encountered when investing in physical retail infrastructure and subsequently AWS data centers.
Following Luan’s departure, Amazon’s AGI Lab, which concentrates on developing AI agents, will continue under DeSantis’s direction.
