Amazon CEO Andy Jassy spoke with CNBC on December 6, 2023, reassuring investors about the company’s investments in generative artificial intelligence (AI). Following a significant increase in Amazon’s capital expenditures, Jassy highlighted the success of Amazon Web Services (AWS), emphasizing that the company anticipates similar returns from its AI endeavors. Amazon plans to invest $75 billion in capital expenditures for 2024, driven largely by the demand for AI technology. Jassy noted that AI has become a multi-billion-dollar revenue stream within AWS, growing rapidly. He expressed confidence that these investments present a unique opportunity for long-term success for both customers and shareholders. Overall, Amazon aims to solidify its position in the fast-evolving AI Market.
Amazon CEO Andy Jassy recently addressed investor concerns regarding the company’s significant investments in generative artificial intelligence (AI) during a conference call following Amazon’s third-quarter earnings report. Speaking with CNBC’s Jim Cramer, Jassy emphasized the importance of Amazon Web Services (AWS) as a key revenue generator, despite the high costs of building data centers. He reassured investors by stating, “We’ve proven over time that we can drive enough operating income and free cash flow to make this a very successful return on invested capital business.”
During the call, Jassy revealed that Amazon spent a staggering $22.6 billion on property and equipment in the last quarter, an increase of 81% compared to the previous year. Looking ahead, the company plans to invest $75 billion in capital expenditures in 2024 and anticipates even higher spending in 2025. Jassy highlighted that this aggressive investment strategy aims to meet the soaring demand for AI technologies, which have gained immense popularity since the launch of ChatGPT by OpenAI nearly two years ago.
Jassy described the current AI investment landscape as a “once-in-a-lifetime type of opportunity,” with expectations that both customers and shareholders will benefit in the long run. He mentioned that AWS is already seeing increased business from companies seeking infrastructure to deploy generative AI models. Amazon is also launching new AI products aimed at enterprises, third-party sellers, and advertisers.
Although Amazon has not disclosed its specific revenue from generative AI, Jassy indicated that it is rapidly becoming a “multi-billion-dollar revenue run rate” business within AWS. He added that its growth is outpacing that of AWS in its early stages, suggesting a bright future for Amazon’s investments in AI technology.
As the tech industry continues to discuss AI spending, other major players like Meta and Microsoft are also ramping up their capital expenditures, driven by similar demands for AI capabilities. With its focus on generative AI, Amazon is positioning itself to be at the forefront of this transformative technological wave.
Tags: Amazon, Andy Jassy, Generative AI, AWS, Tech Investments, Artificial Intelligence, Cloud Computing, Financial News
What does it mean that Amazon’s CEO is pledging to invest in AI?
The CEO is promising to put more money into artificial intelligence technology to make the company smarter and more efficient.
Why is Amazon’s capital expenditure (capex) increasing by 81%?
The increase in capex means Amazon is spending a lot more money on things like technology, buildings, and equipment to support future growth.
How does investing in AI benefit Amazon?
Investing in AI can help Amazon improve its services, make better decisions, and provide a more personalized experience for customers.
When can we expect to see the benefits of these AI investments?
It may take some time, but the hope is that as these technologies are developed and improved, Amazon will see better performance and increased profits in the coming years.
Is this increase in spending a sign of trouble for Amazon?
Not necessarily. It shows that Amazon is focusing on long-term growth and innovation, which can lead to bigger success in the future.
