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Amazon has said it will pump about $100bn into its artificial intelligence initiatives this year as the ecommerce group shrugs off worries about China’s DeepSeek and invests heavily in data infrastructure.
Chief executive Andy Jassy told investors on Thursday that the $26bn Amazon spent in the final three months of last year was “reasonably representative” of its quarterly spending plans for 2025. The figure is business-wide and also includes its retail business.
The bulk of the investment will be in Amazon Web Services, which operates data centres and offers customers software tools.
Amazon’s massive AI spending plans echo other tech giants, including Alphabet, Microsoft and Meta, which are competing to dominate the rapidly growing industry. The groups have stuck with their spending plans despite the emergence last month of DeepSeek, which outperformed some leading AI models but operates at a lower cost.
Jassy said he saw “significant signals of demand” for AI services and products and that the prospect of cheaper and more efficient tools would lead to more customer spending.
“Companies will spend a lot less per unit of infrastructure, and that is very, very useful for their businesses,” he said. “But then they get excited about what else they could build . . . they usually end up spending a lot more in total.”
Amazon’s planned annual investment will outstrip both Alphabet and Microsoft — which have committed $75bn and $80bn, respectively — and came as it notched up modest sales growth at the end of 2024.
The Seattle-based group’s fourth-quarter revenues — which includes the critical holiday shopping season — rose 10 per cent year on year to $187.8bn, edging past estimates of $187bn in a Visible Alpha survey.
But Amazon said it expected net sales in the current quarter to come in between $151bn and $155.5bn, well below forecasts for $158.5bn. A strong dollar will knock first-quarter revenues by $2.1bn, it said.
The company’s shares, which rose 41 per cent in the past 12 months, were down as much as 7 per cent in after-hours trading on Thursday before recovering somewhat to a decline of about 5 per cent.
AWS posted a 19 per cent increase in sales to $28.8bn, falling slightly short of expectations. Google parent Alphabet and Microsoft both posted disappointing results for their cloud businesses in the fourth quarter, citing capacity constraints.
Amazon was facing similar difficulties, particularly in procuring components such as motherboards and meeting the energy demands of resource-intensive AI products, Jassy said.
Jassy has overseen a cost-cutting effort in recent years, including streamlining logistics operations and taking an axe to middle management in a move aimed at ensuring the business can operate “like the world’s largest start-up”.
Amazon’s move to cut operational expenses has facilitated its investment in data centre capacity.
Beyond the AI initiatives, Amazon’s vast ecommerce operations continued growing in the fourth quarter at a modest clip. Net sales in its retail division grew roughly 8 per cent year on year. Revenue from the company’s fast-growing advertising business rose 18 per cent to $17.3bn.
