Amazon.com, Inc.’s (AMZN - Free Report) Amazon Web Services (AWS) has made Amazon Lex, the machine learning technology behind Alexa, available to all customers.
Amazon Lex algorithms facilitate natural language understanding, automatic speech recognition and text to speech. Amazon is now offering these technologies as a fully managed service.
Building Voice and Text-based Apps is Now Easy
With Amazon Lex, developers can build conversational apps easily, which were otherwise extremely difficult to create as these involved complicated deep learning algorithms on enormous amount of data.
Moreover, the integration of Amazon Lex with AWS Lambda (Amazon’s event-driven, serverless computing platform) will enable developers to run serverless codes, apply business logic and fetch data from enterprise applications and AWS services like Amazon DynamoDB.
Further, inbuilt connectors enable the conversational apps to collect data from Software as a Service (SaaS) applications such as Salesforce, QuickBooks, Zendesk and Marketo.
Developers can also use analytics provided by Amazon Lex to assess different application performance and accuracy metrics that they can employ to better their apps over time.
We note that Amazon’s shares appreciated 42.9% in the last one year compared with the Zacks Internet Commerce industry’s gain of 37.6%. AWS’ growth is expected to back the momentum going ahead.
Banking on Alexa’s Success
Amazon Alexa is powered by Amazon Lex’s sophisticated deep learning algorithms. Alexa powered Echo devices are going great guns and help the company sell products and services. Alexa has already been integrated into a host of everyday devices for the digital home and there are agreements for more.
Amazon is racing to build an ecosystem around Alexa and it’s safe to say that it’s taken an early lead over Alphabet (GOOGL - Free Report) owned Google's smart assistant and Microsoft's (MSFT - Free Report) Cortana.
Driven by its Alexa-powered Echo devices, the company has converted the nascent smart home market into a potential area of growth in a very short time.
So, it appears that by bringing the artificial intelligence (AI) platform that powers Alexa to AWS customers, Amazon is trying to bank on Alexa’s success to boost AWS.
Amazon.com, Inc. Net Income (TTM)
AWS Under the Spotlight
The move underscores the fact that Amazon continues to beef up AWS and why not? The unit that was started for the purpose of handling the company’s own storage needs has quickly become a billion-dollar business and the cash cow for Amazon. The business generates much higher margins than retail, so it has a positive impact on Amazon’s profitability.
We believe that the move will boost functionality, partner ecosystem and the experience AWS offers and leads to continued customer wins. AWS has already taken a lead over rival services, such as Microsoft Azure, Google Cloud Platform and International Business Machines’ (IBM - Free Report) IBM Cloud.
If AWS continues to witness the same kind of success, investors can hope for far more growth.
Currently, Amazon has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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