Amazon strategy is to invest in the infrastructure, money is where the machines live. I think they just realized none of those companies have a moat, so why would they? But all of them will buy compute
For Amazon “renting servers” at very high margin is their cash cow. For many competitors it’s more of a side business or something they’re willing to just take far lower margin on. Amazon needs to keep the markup high. Take away the AWS cash stream and the whole of Amazon’s financials start to look ugly. That’s likely driving the current panic with its leadership.
Culturally Amazon does really well when it’s an early mover leader in a space. It really struggles, and its leadership can’t navigate, when it’s behind in a sector as is playing out here.
Companies are not going to stop needing databases and the 307 other things AWS provides, no matter how good LLMs get.
Cheaper competitors have been trying to undercut AWS since the early days of its public availability, it has not worked to stop them at all. It's their very comprehensive offering, proven track record and the momentum that has shielded AWS and will continue to indefinitely.
Further AWS is losing share at a time when GCP and Azure are becoming profitable businesses, so no longer losing money to gain market share.
It's similar to how AWS became the de-facto cloud provider for newer companies. They struggled to convince existing Microsoft shops to migrate to AWS, instead most of the companies just migrated to Azure. If LLMs/AI become a major factor in new companies deciding which will be their default cloud provider, they're going to pick GCP or Azure.