Amazon Chief Executive Andy Jassy said generative AI will “reinvent virtually every customer experience we know” as he defended the tech giant’s big AI spending plans in his annual shareholder letter. Amazon stock slipped in early trading on Thursday.
Similar to last year’s note to shareholders, Jassy made a case for how AI will drive the e-commerce and cloud-computing companies growth. But Amazon’s plan to spend roughly $100 billion on capital expenditures this year is under greater scrutiny by investors following the emergence of lower cost AI models such as those from DeepSeek. Amazon stock has slumped since February.
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“Fundamentally, if your mission is to make customers’ lives better and easier every day, and you believe every customer experience will be reinvented by AI, you’re going to invest deeply and broadly in AI,” Jassy wrote. “That’s why there are more than 1,000 GenAI applications being built across Amazon, aiming to meaningfully change customer experiences in shopping, coding, personal assistants, streaming video and music, advertising, health care, reading, and home devices, to name a few.”
On the stock market today, Amazon stock shed more than 2% to 186.19 in premarket trading.
Jassy Defends AI Spending
Jassy organized his letter around a series of questions asking why, including, “Why invest this much this quickly?”
For the Amazon Web Services cloud business, Jassy said spending reflects demand.
“The faster demand grows, the more data centers, chips, and hardware we need to procure (and AI chips are much more expensive than CPU chips),” Jassy said. “We spend this capital up front, even though these assets are useful for many years (in the case of data centers, for at least 15-20 years).”
The company plans to spending significant capital as AI revenue grows at what Jassy called triple-digit year-over-year rates.
“We continue to believe AI is a once-in-a-lifetime reinvention of everything we know, the demand is unlike anything we’ve seen before, and our customers, shareholders, and business will be well-served by our investing aggressively now,” Jassy wrote.
But he added that Amazon hopes it can bring down costs over time for AI, Jassy added. That includes by offering its own “Trainium2” AI chips that compete against those from Nvidia (NVDA). He added that the process of running data through AI models – called inferencing – will get cheaper over time.
Amazon Stock In Nine-Week Slump
Jassy’s letter comes the day after Amazon stock rallied 12% on news that President Donald Trump paused his plan for “reciprocal” tariffs on all countries for 90 days, with the exception of China.
Still, Amazon stock is slumping as investors fret over a potential trade war between the U.S. and China. Shares have fallen for nine consecutive weeks and are down 13% overall year-to-date.
Jassy’s letter Thursday did not mention the word “tariff.”
The current slump for Amazon stock began with its fourth-quarter results in early February. Amazon beat earnings estimates but offered a lower-than-expected sales forecast for Q1. Shares have tumbled 21% from a record high of 242.52 reached Feb. 4.
You can view Jassy’s full letter here.
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