The unveiling of the Amazon (NASDAQ: AMZN) Nova line of foundation models has sparked a vote of confidence in the company by Wall Street analysts.
Specifically, the product line under Amazon Web Services has prompted Susquehanna analyst Shyam Patil to reiterate a positive rating on AMZN stock, setting a price target of $230.
In a note on December 4, the analyst noted that one of Nova’s most significant advantages is its cost-effectiveness compared to leading models on AWS’s Bedrock platform.
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Patil stated that Nova’s price advantage and strong performance make it a standout in the increasingly competitive artificial intelligence (AI) market.
What is Amazon Nova
Notably, Amazon Nova introduces four models: Micro, Lite, Pro, and Premier. Micro is a text-only model focused on speed and cost-effectiveness, while Lite, Pro, and Premier are multi-modal models in different sizes. Micro, Lite, and Pro are available now, with Premier launching in Q1 2025.
“These three models are 75% more cost-effective than other leading models within Amazon Bedrock, while still delivering fast performance,” the analyst noted.
AWS compared Nova models to competitors like Google Cloud’s Gemini, Claude’s Haiku, and OpenAI’s GPT-4, finding that the Pro model matched or outperformed Claude 3.5 Sonnet in half of the benchmarks.
Amazon also introduced two new tools: Nova Canvas, an image generation model, and Nova Reel, a video generation model that currently produces six-second videos and will eventually create two-minute ones with potential uses in advertising.
Looking ahead, AWS plans to launch a speech-to-speech model in Q1 2025 and an any-to-any model mid-year for seamless multimodal input-output combinations.
To this end, Patil added that Nova’s capabilities could drive greater customer adoption and fuel AWS revenue growth.
Impact of Amazon Nova in AI space
Overall, the new product line signals Amazon’s effort to overcome its perceived lag in AI development as competitors surged ahead.
In this case, Rohit Prasad, head of artificial general intelligence at Amazon, emphasized the company’s strategy to compete on both price and performance, touting faster speeds for the new models.
Indeed, the rollout of the Nova suite added to Amazon’s efforts to establish itself in the AI space with plans to rival key players such as Nvidia (NASDAQ: NVDA). As reported by Finbold, Amazon’s Annapurna Labs is increasing AI chip production to reduce reliance on Nvidia.
The chip, Trainium 2, is nearing market launch after testing with key players like Anthropic and Databricks.
The technology giant is pushing for the rollout of the chip, which could help Amazon reduce AI costs. During the Q3 earnings report, investors expressed pessimism as the company announced plans to increase funding for the already expensive AI endeavors.
Amazon price analysis
By press time, Amazon stock was trading at $219.44, gaining over 3% in the last 24 hours. Indeed, the stock is seeking to end 2024 on a high note, surging by over 46% year to date.
In conclusion, Amazon’s rollout of the Nova product suite is a key statement regarding its intentions to dominate the AI scene, with the potential to attract more users to AWS. However, with most tech giants upping their game in AI, the impact of competition cannot be ignored.
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