Amazon (AMZN, Financial) initially experienced gains today, which later faded, maintaining a modest downward trend since reaching record highs last month. The initial boost was due to reports of Amazon's plans to reintroduce Alexa as an AI product, similar to efforts by Google (GOOG, Financial) and Apple (AAPL, Financial).
Amazon aims to rearchitect Alexa with new foundation models, integrating more AI into its devices. The Kindle Scribe, announced last year, includes an AI-powered notebook for quick note summarization. This device, along with the Kindle Paperwhite featuring a color screen and a new pocket-sized Kindle, exceeded sales expectations shortly after launch.
While the impact of AI on consumer decisions is unclear, it could influence choices among competing products. Although AWS leverages advanced AI, Amazon's consumer electronics, like Alexa, lag behind competitors. Google's Gemini and Apple's Siri have advanced AI features, with Siri now integrated with ChatGPT (MSFT, Financial).
- Amazon's delay in AI advancement is partly due to challenges in eliminating AI hallucinations, where models provide incorrect answers. This issue is common across large language models (LLMs), with companies like Meta Platforms (META, Financial) acknowledging the risks of rushing AI to market.
- Amazon envisions Alexa controlling home functions like lights and music. However, AI hallucinations could hinder adoption, making it crucial to resolve these issues before launching a revamped Alexa.
- Amazon is committed to enhancing Alexa, as confirmed by CFO Brian Olsavsky during the Q3 earnings call. With 500 million Alexa-enabled devices globally, Amazon has the potential to become a leader in consumer tech AI.
Amazon has ambitious plans for Alexa, which is used in various settings including homes, offices, and vehicles. Given the capabilities of LLMs, Alexa could serve as a powerful personal assistant. However, addressing hallucinations is crucial to maintain a positive reputation for its AI model.
