Prime Highlights: 

Amazon plans to increase capital expenditures to $100 billion in 2025, with a significant focus on artificial intelligence (AI), surpassing 2024’s $83 billion spend. 

Amazon has launched AI-driven products like its Nova models, Trainium chips, and the Bedrock marketplace for third-party models. 

Key Background: 

Amazon has announced plans to significantly increase its capital expenditures to $100 billion in 2025, focusing primarily on artificial intelligence (AI) investments. This decision marks a notable rise from the $83 billion spent in 2024. Amazon’s CEO, Andy Jassy, indicated in October that the company’s capital expenditures for 2025 would exceed the previous year, driven by the rapid growth of generative AI. 

In the fourth quarter of 2024, Amazon allocated $26.3 billion to capital expenditures, a figure that Jassy stated is indicative of the annualized rate for 2025. A substantial portion of this spending is dedicated to AI development for Amazon Web Services (AWS), including investments in data centers, networking infrastructure, and hardware to support the surging demand for generative AI technologies. These investments are in response to the increasing competition in the sector, with companies such as OpenAI and Google expanding their AI capabilities. 

Amazon has introduced a series of AI-driven products to bolster its position in the market, including its proprietary Nova AI models, Trainium chips, and a marketplace for third-party models called Bedrock. The company’s AI strategy aligns with industry trends, as competitors like Google parent Alphabet and Microsoft are also ramping up their AI-related capital expenditures. Alphabet plans to invest $75 billion in 2025, while Microsoft intends to spend $80 billion on data centers to support AI workloads. 

Despite mixed results for Amazon in the fourth quarter, with weaker-than-expected sales for the upcoming period, Jassy remains confident in the long-term value of these investments. He referred to the AI opportunity as a once-in-a-lifetime business prospect and reassured shareholders that both the company and its customers would benefit in the medium to long term. Furthermore, Amazon continues to focus on improving its delivery systems and cost-efficiency in its retail operations. This aggressive push into AI comes amid growing market skepticism about the returns on such investments, following the rapid development of Chinese AI startup DeepSeek, which raised concerns about competition in the sector.