As the calendar gets to the end of 2024, Amazon (AMZN -1.45%) stock has had another banner year, up 52% year to date. It has a whole assortment of growth drivers, most notably, its heavily competitive generative artificial intelligence (AI) business. Let's see where it might be three years from now.

Artificial intelligence

It's interesting to think that two years ago, AI wasn't much of a talking point for Amazon, and today, it's the main buzzword.

Amazon has used AI for years throughout its businesses to analyze data and make decisions about planning, merchandising, and fulfillment. But it's only come up as a trend with the development of generative AI over the past two years, and it's already making a giant impression on the whole company.

There are generative AI elements in all of Amazon's businesses now, which I'll get to, but the introduction of it as its own business is through the Amazon Web Services (AWS) cloud computing segment. AWS is the largest cloud services provider in the world, and generative AI adds incredible functionality for AWS clients.

Amazon likes to be everything to everyone, and it's no different with this business. CEO Andy Jassy says that it has three tiers to meet every need and budget. It offers tools for clients to create their own large language models (LLMs) and train their own data at the bottom layer, the option for developers to use Amazon's LLMs to train their data in the middle layer, and ready-to-use options for smaller businesses at the top layer.

The AI business has received incredible interest from customers, and is already producing billions of dollars for Amazon. The company continues to improve it and launch new features, and it recently said it's rolling out its own graphics processing units (GPUs), the chips that are the building blocks of generative AI. They're meant to compete on price with partner Nvidia's GPUs.

Not only is the generative AI boosting sales, but it's also bringing on new clients for AWS. AWS sales had been decelerating, but as inflation moderates and the AI business becomes very attractive, sales are accelerating. Since AWS accounts for more than half of Amazon's total operating income -- 60% in the third quarter -- expect these developments to positively impact Amazon's profitability.

AI is already changing at a fast pace, and in three years it will be much broader, with more game-changing services. Jassy has said quite a few times that 90% of company spending is still on-premises, and that's going to flip to the cloud. When it happens, which he's expecting, it will create a tidal wave of business for Amazon, and the company is shifting into gear to handle it.

E-commerce

E-commerce is less exciting these days than AI, but it's still Amazon's core business. Amazon has a breathtaking lead in U.S. e-commerce, and it's always upgrading to provide faster delivery and better service. The company recently opened its most advanced warehouse in Louisiana, where the new design is cutting processing time by 25%.

E-commerce is increasing as a percentage of retail sales, and Amazon is cementing its lead. It offers generative AI services to its third-party sellers that make it even easier to create product descriptions and videos, and it provides effective data analytics to help convert sales.

In three years, Amazon should be maintaining its top spot and it may have an even wider lead over the competition. It's always trying to get into physical retail in a bigger way, and although that remains a tiny part of its business, and it's closed several attempts, I wouldn't be surprised to see new attempts over the next three years.

Advertising

Advertising isn't one of Amazon's largest businesses, but it has been the fastest-growing one for a while, so it's worth discussing as its own segment. Advertising sales increased 19% year over year in the third quarter, the same as AWS sales. Amazon offers the same benefits of AI for advertisers that it does for third-party sellers and AWS users, with robust data to create strong and effective marketing campaigns.

It also now offers video ads through its ad-supported streaming efforts in Prime Video, which is an exciting addition to the platform.

Advertising was only spun into its own segment in 2022, and in three years, it will still play a major role in sales. As an asset-light business, it should also contribute positively to operating income.

Everything else

Amazon always has something new up its sleeve. It's making strides in Amazon Pharmacy and healthcare, and now it's even selling cars on its platform. In three years, there are likely to be updates that investors can't anticipate today, and that's all in the Amazon innovation spirit that makes it an excellent stock to own today.