In late 2022, digital assistant ChatGPT popularized generative artificial intelligence (AI), which uses machine learning models to create media content like text, images, and video.

Chipmaker Nvidia has benefited greatly from that development. Its revenue nearly tripled in the past year due to unprecedented demand for its data center GPUs, and its share price rocketed 145% during the same period. However, investors who missed those gains have not missed their chance to make money on the AI boom.

Bloomberg Intelligence estimates that generative AI sales will increase by 2,040% to $1.4 trillion by 2032, compounding at 41% annually. That rising tide will lift many companies higher over the next decade, but Amazon (NASDAQ: AMZN) should be a major winner. Here’s why.

Amazon is investing in artificial intelligence across its three core businesses

Amazon has a strong presence in three quickly growing markets. As measured by revenue, the company runs the leading e-commerce marketplace in North America and Western Europe. It is the third-largest digital advertiser in the world and the largest retail media advertiser. And Amazon Web Services (AWS) is the dominant public cloud in terms of infrastructure and platform services.

Amazon uses artificial intelligence (AI) to improve efficiency and create new revenue streams across all three business segments.

• E-commerce: In February, Amazon launched a generative AI shopping assistant (Rufus) for consumers. It has also introduced generative AI tools that help sellers create product listings. Additionally, in North American fulfillment centers, Amazon uses generative AI and computer vision to uncover product defects before they are shipped to consumers. And it uses machine learning to optimize warehouse inventory and last-mile delivery, making its logistics business more efficient.
• Digital advertising: Last year, Amazon introduced a generative AI tool that lets marketers create relevant and engaging lifestyle images featuring their products, which theoretically helps brands run more cost-effective advertising campaigns. Additionally, Amazon uses machine learning to ensure consumers see relevant sponsored product advertising on the marketplace.
• Cloud computing: AWS has designed custom AI chips for training and inference as a cheaper alternative to Nvidia GPUs. The company has also added new features to its machine learning platform SageMaker and generative AI platform Bedrock. CEO Andy Jassy recently told analysts, “During the past 18 months, AWS has launched more than twice as many machine learning and generative AI features into general availability than all of the other major cloud providers combined.”

More broadly, AWS accounted for 32% of cloud infrastructure and platform services (CIPS) spending in the June quarter, which puts it nine percentage points ahead of the next closest competitor, Microsoft Azure. Leadership in CIPS means AWS should be a major beneficiary as businesses spend more aggressively on artificial intelligence.

In a recent note, Jim Kelleher at Argus wrote, “As the leading provider of infrastructure-as-a-service and other cloud services, AWS is positioned uniquely in the burgeoning AI-as-a-service market.” Additionally, executives surveyed by Morgan Stanley collectively see Microsoft Azure and AWS as the public clouds most likely to gain share in generative AI in the next three years.