- Amazon commits £147.7bn ($200bn) to AI and infrastructure.
- Shares slide nearly 9 per cent following the announcement.
- Big Tech set to invest around £480bn ($650bn) collectively this year.
Amazon’s share price fell sharply on Friday after the company set out plans to pour £147.7bn ($200bn) into artificial intelligence and supporting infrastructure, signalling a dramatic escalation in the industry’s spending race.
The figure is far higher than the roughly £92bn ($125bn) the company allocated to AI last year. Investors appeared unsettled by the scale of the commitment, sending the stock down nearly 9 per cent in morning trading.
The spending plan was disclosed alongside Amazon’s full-year results on Thursday. The company said funds will go towards AI systems, specialist chips, robotics and low Earth orbit satellites. However, chief executive Andy Jassy reportedly indicated on a call with analysts that artificial intelligence will take the largest share, as quoted in a news report. He described AI as a significant long-term opportunity and suggested most customer experiences will eventually be reshaped by the technology.
The AI spending race accelerates
Amazon’s announcement comes amid a wider surge in investment from major US technology companies. This week, Amazon, Meta, Google and Microsoft together indicated they will commit around £480bn ($650bn) to AI and related projects over the year.
Meta’s Mark Zuckerberg reportedly said in January that his company could spend up to £100bn ($135bn), nearly double the previous year’s level. Google is expected to invest more than £136bn ($185bn), more than doubling its capital expenditure. Microsoft has already spent over £53bn ($72bn) on AI-related infrastructure and recruitment, with no signs of easing off.
The rapid build-up in spending has triggered debate in financial markets. The Bank of England warned late last year that valuations of leading US tech firms resembled patterns seen before the early 2000s dotcom collapse. Cisco chief executive Chuck Robbins reportedly said AI could be “bigger than the internet” but warned there may be “carnage along the way”, suggesting not all companies will benefit. JPMorgan Chase boss Jamie Dimon reportedly cautioned that some AI investments would “probably be lost”.
Spending up, workforce down
Amazon’s increased investment is unfolding alongside cost-cutting measures. Chief financial officer Brian Olsavsky reportedly noted that the company is seeking savings in other areas as capital expenditure rises.
Last week, Amazon laid off 16,000 employees, following 14,000 job cuts in October. Elsewhere in the sector, executives have suggested AI could reduce the need for certain roles. Zuckerberg reportedly predicted that 2026 could mark a turning point in how AI reshapes the workplace.
The market reaction extended beyond Amazon. Shares in other major tech companies also weakened during the week, weighing on broader indices. The S&P 500, which reached a record high at the end of January, fell more than 1 per cent on Thursday before edging higher in early trading on Friday.
For now, the technology industry appears determined to double down on artificial intelligence. Whether investors grow more comfortable with the scale of spending may depend on how soon it begins to generate consistent returns.