Amazon Plans $100 Billion Capital Expenditure for AI in 2025
Amazon plans to increase its capital expenditures to $100 billion in 2025, focusing on artificial intelligence investments. CEO Andy Jassy reassured investors about the long-term benefits despite mixed fourth-quarter results.
Amazon announced on Thursday its intention to increase capital expenditures to $100 billion in 2025, continuing its focus on investments in artificial intelligence.
This capex figure surpasses last year's spending of roughly $83 billion. Amazon CEO Andy Jassy had indicated in October that the company's 2025 capex would exceed the previous year's figure, primarily due to growth in generative AI.
"We spent $26.3 billion in capex in Q4, and I think that is reasonably representative of what you can expect as an annualized capex rate in 2025," Jassy stated during a call with investors following the company's fourth-quarter earnings report. "The vast majority of that capex spend is on AI for AWS."
To meet the burgeoning demand for generative AI, which has surged in popularity since the release of OpenAI's ChatGPT in late 2022, Amazon is rapidly investing in data centers, networking equipment, and other hardware. The company has rolled out several AI products, including Nova models, Trainium chips, a shopping chatbot, and a marketplace for third-party models called Bedrock.
Other technology firms are also significantly investing in AI. Google parent Alphabet recently projected approximately $75 billion in capital expenditures this year. Meanwhile, Microsoft announced plans to invest $80 billion in fiscal 2025 to develop data centers for AI workloads. Additionally, Meta aims to allocate up to $65 billion for building more data center and computing infrastructure.
Amazon provided an update on its spending plans after reporting mixed results for the fourth quarter. The company anticipates weaker-than-expected sales for the current period, overshadowing better-than-expected earnings for the fourth quarter, leading to a more than 4% decline in shares during extended trading.
Jassy aimed to reassure investors by describing the increased spending as a "once-in-a-lifetime type of business opportunity." He stated, "I believe that our business, customers, and shareholders will be satisfied, medium to long-term, that we are pursuing this capital and business opportunity in AI." He also noted that some capex this year is allocated to improving delivery speed and cost efficiency in their stores business.
However, tech companies are encountering new skepticism regarding their AI spending plans, especially following the rapid success of a Chinese AI startup, DeepSeek. The lab claims its R1 model was developed in just two months and cost less than $6 million, positioning it as a rival to OpenAI's offerings. This revelation led to substantial fluctuations in markets, with chipmakers Nvidia and Broadcom experiencing a combined loss of $800 billion in market capitalization.
