Amazon spends $100 billion on AI Drive this year

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Amazon said it will invest about $100 billion in its AI initiative this year as e-commerce groups shrugged, fearing China's DeepSeek and investing heavily in data infrastructure.

CEO Andy Jassy told investors Thursday that Amazon’s $26 billion in the last three months of last year was a “reasonable representation” of its 2025 quarterly spending plan.

Most of the investment will go to Amazon Web Services, which operates data centers and provides software tools for customers.

Amazon's massive AI spending plans echo other tech giants, including Alphabet, Microsoft and Meta, who are competing to dominate the fast-growing industry. Despite DeepSeek's appearance last month, the groups stick to their spending plans, which outperformed some of the leading AI models but had lower costs.

Jassie said he saw “important signals” for AI services and products, and the prospect of cheaper and more effective tools would lead to more customer spending.

“The company will spend much less per unit of infrastructure, which is very useful for their business,” he said. “But then, they are excited about what else they can build. . . They usually spend more in total.”

Amazon plans to outpace Alphabet and Microsoft annual investments, pledging $75 billion and $80 billion respectively, and reduce modest sales growth by the end of 2024.

The Seattle-based group's fourth-quarter revenue, including a key holiday shopping season, rose 10% year-on-year to $187.8 million, and estimated past estimates of $187.0 million.

But Amazon said it expects net sales for the quarter to be between $15.1 billion and $155.5 billion, well below forecasts, with a selling price of $158.5 billion. It said a dollar of one dollar would cut revenue in the first quarter by $2.1 billion.

The company's stock has risen 41% over the past 12 months, down 7% in after-hours trading on Thursday, before recovering about 5%.

AWS sales rose 19% to $28.8 billion, slightly expected. Google parents Alphabet and Microsoft both suffered disappointing results for their cloud business in the fourth quarter, citing capacity constraints.

Jassy said Amazon faces similar difficulties, especially in purchasing components such as motherboards and meeting the energy needs of resource-intensive AI products.

Jassy has overseen cost cuts in recent years, including streamlining logistics operations and bringing AX axes to mid-level managers to ensure that the business can operate “like the world’s largest startup.”

Amazon's move to cut operating expenses helps its investment in data center capacity.

In addition to the AI program, Amazon's huge e-commerce business continued to grow in the fourth quarter. Net sales in the retail sector increased by about 8%. The company's fast-growing advertising business grew revenue by 18% to $17.3 billion.