Amazon is the latest US tech giant to announce a significant increase in spending on artificial intelligence (AI) and infrastructure.
Reporting its annual results on Thursday, Amazon stated it will invest $200 billion (£147.7 billion) this year, primarily focusing on AI. This is a considerable jump from last year's spending of $125 billion. However, this announcement was not well-received by investors, leading to a more than 11% drop in Amazon's shares during after-hours trading.
In a broader context, it has recently come to light that Amazon, along with Meta, Google, and Microsoft, plans a collective investment of $650 billion into AI and related projects this year, making Amazon the most aggressive investor in AI among these tech giants. The scale of this investment correlates to more than double the economic output of Peru.
Amazon's planned investments include not just AI, but also infrastructure such as robotics and low earth orbit satellites. CEO Andy Jassy emphasized during a call with financial analysts that most of the company’s spending will be dedicated to AI, viewing it as an immense opportunity for future profitability, insisting that AI will dramatically reinvent every customer experience.
Jassy's assertion reflects a similar sentiment from other leaders in the tech sector, including Meta's Mark Zuckerberg and Google's Sundar Pichai, who have also outlined ambitious AI investment plans. Yet, some investors and analysts are sounding alarms about a possible bubble in the AI market, with industry leaders warning about potential economic fallout.
In the backdrop of these developments, Amazon and other tech firms are also looking to implement cost reductions, with Amazon recently announcing layoffs affecting 16,000 workers as part of its financial strategy, which includes a focus on aggressive investment in AI amid signs of market volatility.
Reporting its annual results on Thursday, Amazon stated it will invest $200 billion (£147.7 billion) this year, primarily focusing on AI. This is a considerable jump from last year's spending of $125 billion. However, this announcement was not well-received by investors, leading to a more than 11% drop in Amazon's shares during after-hours trading.
In a broader context, it has recently come to light that Amazon, along with Meta, Google, and Microsoft, plans a collective investment of $650 billion into AI and related projects this year, making Amazon the most aggressive investor in AI among these tech giants. The scale of this investment correlates to more than double the economic output of Peru.
Amazon's planned investments include not just AI, but also infrastructure such as robotics and low earth orbit satellites. CEO Andy Jassy emphasized during a call with financial analysts that most of the company’s spending will be dedicated to AI, viewing it as an immense opportunity for future profitability, insisting that AI will dramatically reinvent every customer experience.
Jassy's assertion reflects a similar sentiment from other leaders in the tech sector, including Meta's Mark Zuckerberg and Google's Sundar Pichai, who have also outlined ambitious AI investment plans. Yet, some investors and analysts are sounding alarms about a possible bubble in the AI market, with industry leaders warning about potential economic fallout.
In the backdrop of these developments, Amazon and other tech firms are also looking to implement cost reductions, with Amazon recently announcing layoffs affecting 16,000 workers as part of its financial strategy, which includes a focus on aggressive investment in AI amid signs of market volatility.
