Amazon is doubling down on artificial intelligence (AI) with plans to boost its total capital expenditures to $100 billion in 2025.
The company, which spent around $83 billion in 2024, is channeling a large portion of the new funds into bolstering its Amazon Web Services (AWS) AI capabilities. This bold move positions Amazon at the forefront of the ongoing AI race alongside other tech giants like Microsoft, Alphabet, and Meta.
Amazon’s massive capital outlay follows a strong push into AI-driven products. During a recent earnings call, CEO Andy Jassy explained that $26.3 billion of the company’s fourth-quarter spending reflected the expected annualized rate for 2025.
“The vast majority of that capex spend is on AI for AWS,” Jassy said, signaling Amazon’s commitment to the AI sector. This includes advanced AI tools, new generations of chips like the Trainium2, and new partnerships, such as its collaboration with Anthropic to enhance the Claude language model.
Amazon AWS unveiled more powerful Trainium3 chips in December 2024, which will become available later this year. These chips are expected to be 40% more energy-efficient and up to twice as fast as the existing Trainium2.
Alongside its infrastructure investments, Amazon is preparing to launch a generative AI-powered version of Alexa. This long-awaited upgrade promises a significant leap in conversational capabilities, offering the potential to transform Amazon’s Alexa-enabled devices into more personalized, responsive tools. With more than half a billion Alexa devices already in circulation, the generative AI model could unlock new revenue streams for the company, which has struggled to make the product profitable.
AI competition heats up
The announcement underscores a broader trend among Big Tech players, all vying to capture dominance in the AI space. Google’s parent company, Alphabet, plans $75 billion in capital expenditures this year, while Microsoft has set aside $80 billion to enhance its data center capabilities. Meta, too, has signaled significant investments in AI infrastructure.
U.S. tech companies have doubled down on AI investments as new challengers like the Chinese AI startup DeepSeek are further intensifying competition. DeepSeek’s R1 model, claimed to rival OpenAI’s GPT at a fraction of the cost, has raised doubts about the sustainability of U.S. tech firms’ growing AI investments. Some analysts see DeepSeek’s rapid progress as a potential “AI Sputnik moment,” urging American companies to accelerate their AI efforts.
As competition in AI heats up, Amazon’s bold spending strategy underscores its ambition to lead the charge in next-generation AI technologies. Despite challenges and skepticism in the market, Amazon remains confident that its investments will pay off in the long term, as its CEOJassy called AI a “once-in-a-lifetime type of business opportunity.”
AWS revenue hit $100 billion in 2024
Amazon reported a 10% year-over-year increase in fourth-quarter net sales, reaching $187.8 billion, as operating income surged to $21.2 billion. For the full year, net sales increased 11% to $638 billion, fueled by robust performance in North America and its cloud business.
For the full year, AWS sales grew 19% to $107.6 billion, crossing the $100 billion mark for the first time, compared to $90.8 billion in 2023.
Andy Jassy highlighted the company’s innovations, particularly in AWS, stating, “What we’ll most remember from this quarter is the remarkable innovation across all of our businesses, none more so than in AWS, where we introduced the Trainium2 AI chip and new models like Amazon Nova and Amazon SageMaker. These are substantial enablers in this emerging technology environment.”
Looking ahead, Amazon expects Q1 2025 sales to range between $151 and $155 billion, a growth of 5% to 9%.
