Amazon is ramping up its investments in artificial intelligence (AI), planning to increase its capital expenditures to an impressive $100 billion by 2025. This strategic move aims to seize opportunities in the rapidly growing field of generative AI, a sector that has gained significant traction since the release of OpenAI's ChatGPT in late 2022. The company has been aggressively investing in data centers, networking gear, and hardware to meet the burgeoning demand.
In recent developments, Amazon unveiled several AI products, including its Nova models, Trainium chips, a shopping chatbot, and Bedrock—a marketplace for third-party models. Despite these advancements, Amazon faces stiff competition from tech giants like OpenAI and Google. Last year, Amazon reported $83 billion in capital expenditures, a figure set to rise substantially as it seeks to enhance its AI capabilities.
Amazon's AI investments are not only expected to drive growth in generative AI but are also anticipated to bolster its AWS platform. CEO Andy Jassy expressed confidence in these initiatives:
"I think that both our business, our customers and shareholders will be happy, medium to long-term, that we're pursuing the capital opportunity and the business opportunity in AI," – Andy Jassy
With rivals like Google parent Alphabet and Meta also making significant capital investments—$75 billion and $65 billion respectively—Amazon's commitment underscores its determination to lead the AI race. Microsoft has similarly announced plans to allocate $80 billion in fiscal 2025 for data center expansion to support AI workloads.
The expected increase in Amazon's capital expenditures aligns with Jassy's earlier prediction that the company's 2025 capex will surpass previous figures, largely driven by advancements in generative AI. He noted:
"We spent $26.3 billion in capex in Q4, and I think that is reasonably representative of what you expect an annualized capex rate in 2025," – Andy Jassy
In addition to generative AI growth, Amazon's investments are poised to improve delivery speed and cost efficiency within its stores business. The development of the shopping chatbot and other AI products is expected to significantly contribute to Amazon's growth trajectory in the coming years.