Amazon plans to significantly increase its capital expenditures to $100 billion in 2025, up from approximately $83 billion last year, primarily to invest in artificial intelligence. CEO Andy Jassy indicated that this spending surge is largely driven by the demand for generative AI, which has grown rapidly since the release of OpenAI’s ChatGPT in late 2022. In the fourth quarter of the previous year, Amazon spent $26.3 billion on capex, setting a precedent for its future investments. The company has rolled out various AI products, including Nova models and Trainium chips, while also developing a marketplace for third-party AI models called Bedrock.
Other tech giants are also making substantial investments in AI, with Alphabet planning $75 billion, Microsoft $80 billion, and Meta up to $65 billion in capital expenditures for 2025. Despite Amazon’s ambitious spending plans, the company reported mixed results for the fourth quarter, leading to a decline in share prices. Jassy reassured investors that the investment in AI represents a “once-in-a-lifetime type of business opportunity” that will benefit stakeholders in the long run. Additionally, Amazon aims to enhance its stores’ delivery speed and cost-effectiveness through its capital expenditures. The broader tech industry faces scrutiny over AI spending following the success of Chinese startup DeepSeek, which developed a competitive AI model at a fraction of the cost.
