Amazon is giving Alexa an AI update, with a “more generalized and capable” large language model in development to power the device, CEO Andy Jassy told investors on the company’s Q1 earnings call. While Jassy addressed updates to the company’s AI and machine learning tech that is now facing increased competition, it was actually advertising that gave the company bragging rights this quarter. Amazon’s ad products had 21 percent revenue growth year-over-year, totaling $9.5 billion. As many digital companies struggle to maintain ad momentum in a restrained market, the results are impressive.

“While the $38 billion that Amazon made from ads in 2022 is a small fraction of the company’s overall revenue that year of $502 billion, ads ‘probably had well over 50 percent operating margins, which would mean it brought in as much operating profit as AWS,’” Axios quotes tech analyst Benedict Evans, who calls ads “a very profitable new business” for the online sales giant.

While AWS revenue dwarfed ad sales for Q1, at $21.4 billion — up 16 percent over Q1 2022 — Amazon is seeing growth slow in its cloud business. Though still the largest cloud services provider, AWS is seeing competitors Microsoft and Google cutting into its market share.

Meanwhile, its share of U.S. digital-advertising spend is growing. Axios says “its share is expected to grow to 12.4 percent this year, according to estimates from Insider Intelligence, up from 11.7 percent in 2022.” Jassy told investors the company is still in the “very early” stages of efforts to place ads in video, audio, live sports and grocery, pointing to “a lot of upsides.”

Amazon sells ads to its sellers and vendors, offering sponsored ads, display, and video advertising. A Jungle Scout report on “Amazon’s skyrocketing ad sales” documents a 147 percent increase from 2019 to 2022 (the first year the company began reporting standalone revenue related to ad services).

Regarding artificial intelligence, VentureBeat cited Jassy’s claim that he thinks it is “going to really rapidly accelerate our vision of becoming the world’s best personal assistant” with Alexa, adding, “I think there’s a significant business model underneath it.”

Jassy explained that Amazon “starts from ‘a pretty good spot with Alexa, with its couple of hundred million of endpoints being used across entertainment and shopping and smart home and information and a lot of involvement from third-party ecosystem partners,” according to VentureBeat, which reports that the company already has its own large language model, “but we’re building one that’s much larger and much more generalized and capable.”

Overall, Amazon posted “$3.2 billion in net income for the March quarter, a stark reversal from its $3.8 billion net loss a year ago,” Financial Times reports, noting that Amazon — like Microsoft, Alphabet and Meta — has been working on efficiencies.