Amazon has announced a significant investment in artificial intelligence (AI), with over $100 billion allocated for 2025. The majority of this budget will be directed toward enhancing AI capabilities in its cloud division, Amazon Web Services (AWS), CEO Andy Jassy revealed during the company's fourth-quarter earnings call (February 6, 2025).

Jassy stated that Amazon’s capital expenditure in Q4 2024, which reached $26.3 billion, serves as a reference for its 2025 spending. Based on this figure, the company is expected to allocate approximately $105.2 billion for AI investments throughout the year. This marks a sharp increase from Amazon’s $78 billion capital spending in 2024.

Amazon dismissed concerns that declining AI costs might reduce overall technology spending. Instead, Jassy argued that lower AI costs would fuel greater demand, ultimately benefiting AWS. He compared this trend to the early days of the internet and cloud computing, where cost reductions led to broader adoption rather than reduced spending.

Other major technology companies are also ramping up their AI budgets. Meta’s CEO Mark Zuckerberg recently stated that the company plans to invest "hundreds of billions" in AI over the long term, with at least $60 billion set for 2025. Alphabet has also increased its AI-related capital expenditures by 42%, bringing its 2025 budget to $75 billion. Meanwhile, Microsoft has committed $80 billion to AI data centers this year.

Microsoft CEO Satya Nadella even referenced Jevons Paradox—a concept in economics suggesting that as efficiency increases, so does demand—highlighting the belief that lower AI costs will drive further investment rather than limit spending.

Despite speculation about potential AI budget cuts, Amazon’s latest move signals that Big Tech is continuing to expand its AI capabilities at an unprecedented scale. With AI at the center of these investments, competition among leading technology companies is expected to intensify.

SOURCE: TECHCRUNCH | PHOTO: GETTY IMAGES

This article was created with AI assistance.