Is the AI Gold Rush Still On? A Historical Look at Amazon's AWS Offers a Compellingly Clear Answer.

The past few years have felt like a gold rush -- at least for investors in the artificial intelligence (AI) space. They've raced to get in on companies developing and selling AI products and services, and in many cases, their investments have soared. Companies such as AI chip designer Nvidia, AI software company Palantir Technologies, and AI cloud player CoreWeave have seen their stock prices climb in the triple and even quadruple digits.

In recent weeks, though, investors have rotated out of many of these top AI stocks in favor of companies in other industries. A variety of concerns hurt appetite for growth stocks, particularly AI players that have soared over the past few years. Investors questioned whether the AI growth opportunity would disappoint, and they worried about the ongoing conflict in Iran and its impact on the overall economy.

Over the past several days, investors have grown more optimistic, however. An ongoing ceasefire in Iran is seen as a step forward along the path to peace, and as for AI, signs show demand continues at high levels.

But is the AI gold rush really continuing? To answer this, it's a great idea to turn to one of the biggest players in the industry: Amazon (NASDAQ: AMZN). A historical look at the company's Amazon Web Services -- its cloud computing unit -- offers a compellingly clear answer.

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Amazon's role in AI

So, first, let's take a look at how Amazon fits into the AI picture. You may know the company best for its e-commerce business, but its biggest profit driver is AWS. Through AWS, Amazon offers customers a broad range of services, from non-AI to AI-related. Both have been booming, and AWS is the world's biggest cloud services provider.

That's a fantastic position these days, as it allows Amazon to benefit from one of the greatest needs: capacity for AI workloads. Companies of all sizes may turn to AWS for a wide range of AI products and services, from chips to a fully managed AI service called Amazon Bedrock. All of this makes AWS a key player in the AI space.

Now, let's consider the historical clue that helps us answer that gold rush question. Three years after Amazon launched AWS, that business had a $58 million revenue run rate. Now, three years into the AI boom, AWS' AI revenue run rate is more than 260 times that -- it reached $15 billion in the first quarter of this year and is rising rapidly.

A technology that's "quickly adopted"

"We have never seen a technology more quickly adopted than AI," Amazon chief executive officer Andy Jassy wrote in his latest letter to shareholders. As an example, Jassy said ChatGPT reached 100 million users four times faster than TikTok and 15 times faster than Instagram.

This historical picture suggests that this opportunity to benefit from AI growth is far from over. AI has delivered faster and significantly greater growth than general cloud services several years ago, and customers are eager to apply AI to their businesses and daily lives.

So, history tells us this gold rush is far from over -- even if AI stocks go through periods of volatility, such as earlier this year, the long-term story remains intact. What does that mean for you as an investor? Take advantage of the dips to get in on companies that have proven their strengths in AI, already are generating growth, and have a clear path to revenue gains as the AI story develops. This could be a chip leader, such as Nvidia, or a cloud giant like Amazon.

Companies are in the early days of AI use, opening up the door to more growth ahead for providers of AI products and services. All of this means investors should aim to hold onto these investments for a number of years -- this gold rush could pay off in a major way over the long run.

Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.