Amazon CEO Andy Jassy announced during the company’s Q4 2024 earnings call that Amazon plans to spend approximately $100 billion on capital expenditures in 2025. This projection is based on the $26.3 billion spent in Q4 2024, which Jassy indicated is a “reasonably representative” figure for each quarter of 2025. The majority of this investment will be directed towards Amazon Web Services (AWS) and AI development.
AWS sign in Javitz Center NYC.
This announcement follows similar commitments from other tech giants heavily investing in AI. Google’s CEO, Sundar Pichai, revealed a planned $75 billion investment in AI capital expenditures for 2025. Meta is also projected to invest between $60 billion and $65 billion, while Microsoft has committed $80 billion to AI capital expenditures in the same year.
Amazon’s significant investment in AI aligns with its recent partnership with Anthropic, the creator of the Claude large language model (LLM). This collaboration focuses on training Anthropic’s next-generation LLMs using Amazon’s newly released Trainium2 processors. Amazon is currently building a dedicated data center to house hundreds of thousands of these chips. Furthermore, Jassy announced that the successor to Trainium2, Trainium3, is expected to be unveiled later this year.
Jassy acknowledged the competitive landscape of the AI industry, stating, “We’re all learning from one another. You have seen and will continue to see a lot of leapfrogging between us.” This intense competition is fueled by advancements like DeepSeek’s release, an AI model offering comparable performance to OpenAI’s leading reasoning models at a significantly lower cost and energy consumption.
Despite a 40% increase in stock value over the past year, Amazon’s stock experienced a 4% decline following the earnings call. This dip may reflect investor uncertainty regarding the substantial financial commitment to AI amid a rapidly evolving and competitive market.
While Amazon’s substantial investment underscores its commitment to AI innovation, the market’s response suggests a cautious approach towards the long-term implications of this spending. The coming year will be crucial in determining how these investments shape the future of AI and the companies vying for leadership in this transformative technology.
