Amazon has revealed plans to increase its capital expenditure (capex) to an estimated $105.2 billion in 2025, a 35% rise from the $78 billion spent in 2024.
The majority of this investment will be directed towards artificial intelligence (AI) capabilities within its cloud division, Amazon Web Services (AWS), according to CEO Andy Jassy.
During the company’s fourth-quarter earnings call, Jassy explained that the $26.3 billion spent in Q4 2024 is a strong indicator of the annual spending trend for 2025. “Sometimes people make the assumption that if you’re able to decrease the cost of any type of technology component … that somehow it leads to less total spend in technology. We’ve never seen that to be the case,” he said, drawing parallels between AI adoption and previous technology booms, such as the rise of the internet and cloud computing.
Amazon’s aggressive AI spending contradicts reports that cheaper AI models would slow down investments in the sector. Instead, the company expects reduced costs to drive greater demand, benefiting AWS, which offers a broad range of AI-powered services.
Other major tech firms are making similar commitments. Meta is preparing to allocate at least $60 billion towards AI development in 2025, with CEO Mark Zuckerberg stating that the company plans to invest “hundreds of billions” in the long run due to rising AI demand across its platforms.
Alphabet has also increased its AI spending, boosting its 2025 capex by 42% to $75 billion. CEO Sundar Pichai defended the decision, asserting that declining AI costs “will make more use cases feasible.” Meanwhile, Microsoft is set to invest $80 billion in AI data centres next year, strengthening its focus on infrastructure that supports AI expansion.
With this vast investment sums into AI, Microsoft CEO Satya Nadella highlighted the economic principle of Jevons Paradox—the idea that lower prices often lead to higher demand—by sharing its Wikipedia page amid discussions on AI affordability.
Even with uncertainties about whether this pattern will hold true for AI, Big Tech is showing no signs of cutting back on AI investments. Instead, spending is accelerating, with each company thriving to take the top point in the next phase of AI-driven innovation.
