Amazon is reshaping its artificial intelligence strategy by scaling back development of several flagship Nova AI models, according to a Business Insider report published before the company's quarterly earnings on Thursday. The changes affect the high-end Premier and Omni models, as well as the Reel video-generation model and Canvas image-generation model, with some employees describing these products as being in 'keep the lights on' mode—an engineering term for software receiving maintenance but no longer prioritized for development. The reported restructuring follows layoffs in Amazon's Artificial General Intelligence organization and the closure of AGI Lab last week, a research unit formed after the company hired much of the team behind AI startup Adept. Amazon has shifted engineering talent and computing resources toward a new initiative called Frontier Model Research, led by Pieter Abbeel, who joined following Amazon's acquisition of AI robotics startup Covariant. The strategic pivot comes as Amazon stock traded flat in pre-market hours on Tuesday after five consecutive losing sessions, with Evercore ISI maintaining an Outperform rating and $315 price target ahead of second-quarter results.
Amazon Scales Back Development of Nova AI Models
According to Business Insider, Amazon has begun winding down active development of several flagship Nova models, citing people familiar with the matter. The affected models include Nova Premier, Nova Omni, Reel (video-generation), and Canvas (image-generation). Some employees reportedly described these models as being in 'KTLO,' or 'keep the lights on,' an engineering term referring to software that continues to receive maintenance and customer support but is no longer a primary focus for development.
The reported changes come shortly after layoffs within Amazon's Artificial General Intelligence organization and the closure of AGI Lab, a research unit the company formed after hiring much of the team behind AI startup Adept. Amazon continues to support Nova 2 Sonic, Nova 2 Lite, Nova Forge (which helps customers build and customize AI models), and Nova Act (its AI agent platform), according to the report.
Frontier Model Research Initiative Takes Priority Under Pieter Abbeel
Amazon has shifted engineering talent and computing resources toward a new initiative known internally as Frontier Model Research (FMR), according to the Business Insider report. The effort is led by Pieter Abbeel, who joined Amazon following its acquisition of AI robotics startup Covariant. The project has reportedly become one of Amazon's top AI priorities this year.
The company is developing a new flagship foundation model that could debut at its annual re:Invent conference later this year, according to the report. The upcoming flagship model could eventually be released under the Nova brand, Business Insider said.
Evercore ISI Maintains Outperform Rating Ahead of Earnings
Evercore ISI reiterated its Outperform rating and maintained a $315 price target on Amazon stock. The firm expects Amazon to deliver second-quarter results broadly in line with consensus estimates. Evercore said Wall Street's revenue forecast of roughly $196 billion, representing about 17% year-over-year growth and 9% sequential growth, appears achievable and carries more upside than downside potential.
Amazon is scheduled to report quarterly earnings on Thursday. Shares traded flat in pre-market hours on Tuesday, following five consecutive losing sessions. Retail sentiment on Stocktwits around AMZN stock remained in bullish territory over the past day.
FAQ
What changes did Amazon make to its Nova AI models?
Amazon scaled back active development of several flagship Nova AI models, including Premier, Omni, Reel (video-generation), and Canvas (image-generation), according to a Business Insider report. Some employees described these models as being in 'keep the lights on' mode, meaning they receive maintenance and customer support but are no longer a primary development focus. Amazon continues to support Nova 2 Sonic, Nova 2 Lite, Nova Forge, and Nova Act.
Who leads Amazon's new Frontier Model Research initiative?
The Frontier Model Research initiative is led by Pieter Abbeel, who joined Amazon following the company's acquisition of AI robotics startup Covariant. According to Business Insider, the project has become one of Amazon's top AI priorities this year, with the company developing a new flagship foundation model that could debut at its annual re:Invent conference later this year.
What is Evercore ISI's outlook on Amazon stock before earnings?
Evercore ISI reiterated an Outperform rating and maintained a $315 price target on Amazon stock. The firm expects second-quarter results broadly in line with consensus estimates, with Wall Street forecasting roughly $196 billion in revenue (about 17% year-over-year growth and 9% sequential growth). Evercore said the revenue estimate appears achievable and carries more upside than downside potential.
