Amazon's stock has been warned by CEO Andy Jassy that despite plans to spend $100 billion on capital spending this year, CEO Andy Jassy could face capacity constraints on cloud computing units. , down 4% on Friday.
“It's true that without some of the capacity constraints, we could grow faster,” Jassy said in a revenue call with investors on Thursday.
In particular, he mentioned the delay in getting hardware and not having enough electricity, According to a Bloomberg report.
In October, Jassy predicted that he would spend more money in 2025 than the roughly $83 billion he spent last year due to his continued expansion, mainly in AI.
“We spent $26.3 billion on CAPEX in the fourth quarter, which I think is reasonably representative of what we expect to see an annual CAPEX rate in 2025.” According to the CNBC report.
“The bulk of that refurbishment is in AWS AI,” referring to the company's cloud computing arm, Amazon Web Services, which showed the weaknesses in Thursday's revenue report.
Like most tech giants, Amazon spends a lot of money on data centers and hardware to meet the empty demand for generating AI.
After Openai launched ChatGpt, spending on artificial intelligence took off in 2022, sending rival races to release their own chatbot.
Since then, Amazon has released a number of AI products, including Generated NOVA models, Trainium chips, Shopping chatbots and Bedrock, a market for third-party AI models.
The high-tech sector is expected to continue its oversized spending on AI this year.
Google Parent Alphabet said it expects to invest around $75 billion in capital expenditure this year.
Microsoft plans to spend $80 billion, and Meta says it will spend up to $65 billion on capital expenditures, both citing the need to build more data centers and computing infrastructure He said.
However, Tech Giants' spending was under the microscope after using less than $6 million in just two months after Chinese AI startup DeepSeek claimed it had developed the R1 model at some of its rival's costs .
This claim sent shockwaves throughout the industry and served as a catalyst for major stock sales.
According to Bloomberg, it erased $589 billion from the market capitalization of US chipmaker Nvidia.
Amazon also reported weaknesses in its cloud computing unit this week, along with worse revenue and profits than expected.
Jassy tried to convince investors that investing in “once in a lifetime” AI opportunities is valuable.
“I think both our business, our customers and our shareholders are pleased with the pursuit of capital and business opportunities in AI,” Jassy said.
“We've also spent CAPEX this year on our store business. In fact, we're looking to continue to improve delivery speeds and costs to service.”
