Amazon announced plans to increase its capital spending to $100 billion in 2025, emphasizing its commitment to AI and infrastructure expansion. This represents a sharp rise from the $83 billion spent in 2024.
CEO Andy Jassy indicated that the bulk of this investment will support AWS’s AI advancements. “In Q4, we spent $26.3 billion in capex, and this is indicative of our expected annualized rate for 2025,” he noted during an investor call.
Amazon is expanding its data center capacity, networking infrastructure, and AI-driven products like Nova models, Trainium chips, and Bedrock, a marketplace for third-party AI models. Other tech giants, including Alphabet, Microsoft, and Meta, are also ramping up AI spending, with respective budgets of $75 billion, $80 billion, and $65 billion.
The announcement follows a mixed Q4 earnings report. While Amazon exceeded revenue and profit expectations, its outlook for the next quarter disappointed analysts, causing a 4% dip in its stock price.
Despite skepticism about escalating AI expenditures, Jassy reassured investors, calling it a “once-in-a-lifetime business opportunity.” He added that Amazon is also investing in retail operations to enhance delivery speeds and efficiency.
Meanwhile, competition from emerging AI startups like China’s DeepSeek raises questions about cost efficiency. DeepSeek claims to have developed an AI model comparable to OpenAI’s for under $6 million, triggering significant losses for chipmakers like Nvidia and Broadcom.
As AI investments intensify, Amazon and other tech leaders must balance spending with sustainable growth to maintain their competitive edge.
