Amazon has joined the ranks of America’s biggest technology firms making unprecedented bets on artificial intelligence — and the market response has been swift and unforgiving.
In its latest annual financial disclosure, the e-commerce and cloud computing giant revealed plans to spend $200bn (£147.7bn) this year on expanding its business, with a significant portion earmarked for artificial intelligence. The figure marks a sharp rise from last year’s $125bn investment, making Amazon the most aggressive spender on AI among Big Tech peers.
Yet instead of applause, the announcement triggered concern. Amazon’s shares fell by more than 11% in after-hours trading, reflecting growing investor unease over the escalating costs of AI development and the lack of immediate returns.
Chief executive Andy Jassy was candid about the company’s priorities during a call with analysts. While Amazon cited spending across AI, chips, robotics and low-Earth-orbit satellites, Jassy made it clear that artificial intelligence sits at the centre of its long-term strategy.
“This is an unusual opportunity,” he said, describing AI as a force that will fundamentally reshape Amazon’s products and services. “Every customer experience we have today will be reinvented by AI.”
Amazon’s push mirrors a broader industry trend. Meta, Google and Microsoft are collectively expected to invest around $650bn in AI and related infrastructure this year. Meta’s chief executive Mark Zuckerberg recently announced spending of up to $135bn, nearly double the company’s investment from the previous year. Google, meanwhile, plans to more than double its capital expenditure to $185bn, focusing heavily on data centres and AI-driven infrastructure.
Despite rising revenues and profits across the sector, investors appear increasingly cautious. Analysts are pressing technology firms for clearer paths to monetisation as development costs soar. The recent dip in the S&P 500, which includes all major US tech players, underscores a wider sense of market fatigue following years of rapid growth.
At Amazon, the financial balancing act has had human consequences. Chief financial officer Brian Olsavsky acknowledged that cost-cutting measures are being implemented elsewhere in the business. Over the past few months, the company has laid off 30,000 employees, signalling that efficiency and automation may increasingly replace human labour.
Zuckerberg echoed this sentiment, noting that AI tools are already reducing the need for large technical teams. He predicted that 2026 will mark a turning point, when artificial intelligence dramatically alters the way people work.
Microsoft has so far avoided specifying its total AI spending, though it has already invested over $72bn in talent acquisition and infrastructure, with no signs of slowing down.
As technology giants race to dominate the AI future, they face a growing challenge: convincing investors that today’s massive expenditures will translate into tomorrow’s sustainable profits. For now, Amazon’s bold gamble highlights a defining tension of the AI era — innovation at unprecedented scale, paired with unprecedented scrutiny.
