Amazon Goes All-In on AI With a Record $100 Billion Investment

This month, Rafe Uddin published an in-depth piece in the Financial Times on Amazon’s staggering $100 billion AI investment plan, raising questions about how this spending compares to its Big Tech rivals and what it signals about the evolving AI race. While Alphabet and Microsoft have committed $75 billion and $80 billion, respectively, Amazon has decided to go even bigger—despite recent industry tremors caused by China’s DeepSeek.

The e-commerce giant’s CEO Andy Jassy laid out the company’s aggressive strategy during its latest earnings call, telling investors that the $26 billion spent in the final quarter of 2024 was “reasonably representative” of its plans for the year ahead. Much of this spending is earmarked for Amazon Web Services (AWS), which remains the company’s golden goose and a dominant player in cloud computing.

Jassy emphasized that AI is becoming a catalyst for further investment rather than a cost-cutting tool. “Companies will spend a lot less per unit of infrastructure, and that is very, very useful for their businesses,” he explained. “But then they get excited about what else they could build… they usually end up spending a lot more in total.” This framing suggests that Amazon sees AI not as a way to trim expenses, but as a means of unlocking entirely new revenue streams.

However, Amazon is not immune to the challenges facing the AI sector. Like Alphabet and Microsoft, the company cited cloud capacity constraints as a hurdle to growth, particularly in securing critical components like motherboards and managing the immense energy demands of AI workloads. As Uddin noted, AWS’s 19% year-over-year sales increase to $28.8 billion fell just short of expectations—a reminder that even the biggest cloud providers are facing growing pains.

Meanwhile, Amazon’s core retail business remains steady, though unspectacular. The company reported a 10% year-over-year increase in fourth-quarter revenues, reaching $187.8 billion, but its forecast for the first quarter of 2025 was softer than analysts had hoped. A strong U.S. dollar is expected to shave $2.1 billion off its top line. Despite this, Amazon’s fast-growing advertising division continues to thrive, with an 18% revenue jump to $17.3 billion, reinforcing the idea that Amazon is more than just an e-commerce powerhouse.

Jassy’s focus on efficiency—cutting middle management and streamlining logistics—has helped fuel these AI investments. His mantra of running Amazon “like the world’s largest start-up” seems to be paying off, allowing the company to reallocate resources toward the infrastructure needed to dominate the next phase of the AI boom.

While some investors remain cautious—Amazon’s stock initially dipped 7% in after-hours trading before recovering slightly—the broader trend is clear: AI is the battleground, and Amazon is willing to spend big to win. With Microsoft, Alphabet, and now DeepSeek in the mix, 2025 is shaping up to be a defining year for the AI industry. The question is whether Amazon’s bet will pay off in the long run, or if the sheer scale of this investment will create challenges that even AWS can't compute its way out of.

References

• Rafe Uddin (2025). Amazon to spend $100bn this year in AI drive. Financial Times. Available online. Accessed 17 February 2025.