Spending Surge And Market Reaction
Amazon said it will sharply increase its spending this year, with much of the money set aside for artificial intelligence projects and infrastructure, a move that places it alongside other US technology companies that are raising investment in the sector.
Reporting its annual financial results on Thursday, the company said it expects to spend $200bn, or £147.7bn, in 2026 to build out its business. That compares with $125bn spent last year. Investors reacted negatively to the scale of the plan, and Amazon’s shares fell by more than 11% in after-hours trading.
Among the largest technology firms, Amazon’s plans are now the most aggressive. Together with companies such as Meta, Google, and Microsoft, the group is expected to spend about $650bn this year on AI and related projects.
Where The Money Is Going
Amazon said the spending will cover “AI, chips, robotics, and low earth orbit satellites,” but chief executive Andy Jassy told analysts that most of the investment will go toward AI.
“It’s an unusual opportunity,” Jassy said when speaking about AI and its future profitability. He said he believes every customer experience Amazon offers will be reshaped by the technology. “We’re going to invest aggressively,” he added.
Chief financial officer Brian Olsavsky said the company is looking for cost savings in other areas as spending rises. Last week, Amazon cut another 16,000 jobs, following 14,000 layoffs in October.
Other Tech Companies Set Similar Course
Leaders at other large technology firms have outlined comparable plans. Meta chief executive Mark Zuckerberg said last month that his company expects to spend up to $135bn this year, nearly double what it spent a year earlier. Meta, which owns Facebook, Instagram, and WhatsApp, is using the money to train AI models, expand data centres, and buy the chips needed to run AI systems. Zuckerberg also said that wider use of AI by technical staff means fewer people are needed on large projects, and he said he expects 2026 to be a year when AI changes how people work.
Google chief executive Sundar Pichai said his company plans to spend even more than Meta, with capital expenditure set to more than double to $185bn this year. The company is expanding AI-related infrastructure, including servers and data centres.
Microsoft has not given a full-year spending figure, but it has already spent more than $72bn on AI-related talent and infrastructure. Company executives have not indicated any plan to reduce that level of investment.
Investor Pressure And Broader Market Moves
The wave of spending comes at a time when investors are looking for clearer signs of revenue from increasingly costly AI projects. Shares in Meta, Microsoft, Google, and Amazon have all fallen in recent days, despite growth in revenue and profit.
The S&P 500 index, which includes those companies and many others in the technology sector, fell by more than 1% on Thursday. The drop added to losses that followed a record high reached at the end of January.
Featured image credits: Flickr
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