E-commerce titan Amazon believes that the massive $200 billion allocated for capital expenditures (CapEx) this year will pay off, even though investors think otherwise.
Speaking at Amazon’s latest earnings call, CFO Brian Olsavsky says the bulk of the company’s planned capital investment is flowing into its cloud platform, Amazon Web Services (AWS), with AI accounting for the largest share.
According to Olsavsky, AI has become a money printer for the company.
“If you look at the capital we are spending and intend to spend this year, it’s predominantly in AWS. And some of it is for our core workloads, which are our non-AI workloads, because they are growing at a faster rate than we anticipated. But most of it is in AI, and we just have a lot of growth and a lot of demand. When you are growing 24% year over year with an annualized revenue run rate of $142 billion, you are growing a lot. And what we are continuing to see is that as fast as we install this capacity, this AI capacity, we are monetizing it. So it’s just a very unusual opportunity.”
Olsavsky believes that the next stage of AI evolution will push Amazon to greater heights as companies and consumers rely on AWS to power applications.
“I think the other thing is that if you really want to use AI in an expansive way, you need your data in the cloud, and you need your application in the cloud. Those are all big tailwinds pushing people towards the cloud. So we are gonna invest aggressively here, and we are gonna invest to be the leader in this space as we have been for the last number of years.”
Amazon CEO Andy Jassy echoes Olsavsky’s view that AI is driving the firm’s massive CapEx this year.
“With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low-earth-orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026, and anticipate strong long-term return on invested capital.”
While Amazon’s executives see a bright future in AI, investors are not convinced. News of the firm’s $200 billion CapEx sent the stock tumbling 4.42% toward $222.69.
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