Amazon's CEO doubles down on AI spending: 'We are not going to be conservative'

By Christine Ji

Echoing the early days of AWS, Amazon is ignoring the doubters and aggressively pursuing its AI investments

CEO Andy Jassy shared that Amazon's custom-chip business could be a significant growth driver.

Amazon.com CEO Andy Jassy's annual shareholder letter made it clear that the company is fully committed to its artificial-intelligence initiatives, even as some investors balk at their steep cost.

Amazon (AMZN) has drawn scrutiny for its commitment to devote $200 billion toward capital expenditures this year, primarily to fund its Amazon Web Services division and add data-center capacity. Jassy pushed back against the doubters in his letter published Thursday, sharing more details regarding the future acceleration potential of AWS.

"We're not going to be conservative in how we play this - we're investing to be the meaningful leader, and our future business, operating income, and [free cash flow] will be much larger because of it," Jassy wrote. He characterized AI as a "seminal shift" and one of the fastest-moving technologies in history.

Capex will outpace revenue growth in the build-out phase, resulting in short-term pressures on free cash flow, Jassy acknowledged. But he signaled Amazon's willingness to endure these near-term headwinds for the long-term payoff.

The company has been "comfortable being misunderstood for long periods of time," Jassy added, referencing the backlash Amazon received when it was first building out AWS over a decade ago.

See more: Amazon's stock just clinched its worst losing streak in nearly 20 years. It's giving investors AWS déjà vu.

Jassy also signaled that the company is going all in to pursue the AI opportunity, echoing sentiments from other CEOs such as Meta Platforms' (META) Mark Zuckerberg. "You have to be comfortable potentially over-rotating when pursuing one of these big needle-movers. You may end up investing a little more than needed, but it's better to capture most of the transformational upside than to miss much of it by cutting it too fine," Jassy wrote.

The company's custom-chip business is one AI area that investors may be overlooking. Jassy touted the price-to-performance profile of Amazon's Graviton and Trainium chips. That benefits both customers and Amazon alike, Jassy wrote, adding that "at scale, we expect Trainium will save us tens of billions of capex dollars per year, and provide several hundred basis points of operating margin advantage versus relying on others' chips for inference." The annual run-rate revenue for Amazon's chip business now exceeds $20 billion and is growing at triple-digit percentages from a year before.

More: Amazon's stock could soar 50%, as this analyst says investors are looking at AI spending all wrong

Amazon's capex is backed by customer commitments that make the spending "predictable," Jassy said, adding that most of the $200 billion worth of investments this year will be monetized by 2028. Amazon added nearly 4 gigawatts of new power capacity in 2025 and plans to double its capacity by 2027 to ease capacity constraints and address unserved demand. Most recently, OpenAI has committed to consuming 2 gigawatts of Tranium compute. Jassy hinted at other unannounced contracts in the works.

"Progress will not be linear. There will be moments of acceleration and moments where we adjust course," Jassy said. "We will experiment, invest disproportionately behind what matters and pull back when something isn't working."

But the company is showing no signs of pulling back on AI anytime soon.

-Christine Ji

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04-09-26 0835ET