The agreement, which expands a partnership the two companies began in 2023, strengthens Amazon’s place in the fast-growing market for advanced computing services.

Amazon said it will invest $5 billion in Anthropic immediately, with a further $20 billion available later if agreed commercial targets are met. That comes on top of the $8 billion Amazon has already invested in the company.

Anthropic, the maker of Claude, said it will use current and future generations of Amazon’s Trainium chips to train and run its models, expecting to secure up to five gigawatts of computing capacity over time.

The company also confirmed that one gigawatt of capacity using Trainium2 and Trainium3 chips should be available by the end of this year.

Giving Anthropic more access to the large-scale infrastructure needed to support high demand, Amazon gets a major long-term customer for its custom-built chips and cloud services.

More than 100,000 customers already use Anthropic’s Claude models on AWS, according to the companies.

Customers will also be able to access Anthropic’s Claude Platform directly through AWS accounts, allowing them to use existing billing, security controls and monitoring tools without separate contracts.

Amazon has invested heavily in expanding data centres and computing power as demand for advanced software tools rises. The company recently said it expects around $200 billion in capital spending this year, with much of that linked to technology infrastructure.

Chief Executive Andy Jassy said Anthropic’s long-term use of Trainium chips showed the progress both companies had made together.

“Our custom AI silicon offers high performance at significantly lower cost for customers, which is why it’s in such hot demand,” he said.

“Anthropic’s commitment to run its large language models on AWS Trainium for the next decade reflects the progress we’ve made together on custom silicon, as we continue delivering the technology and infrastructure our customers need to build with generative AI.”

Anthropic Chief Executive and co-founder Dario Amodei said demand for Claude continued to grow quickly.

“Our users tell us Claude is increasingly essential to how they work, and we need to build the infrastructure to keep pace with rapidly growing demand,” he said.

“Our collaboration with Amazon will allow us to continue advancing AI research while delivering Claude to our customers, including the more than 100,000 building on AWS.”

Amazon shares rose about 2.7% in extended trading after the announcement.

The latest round, which is the biggest shake-up in the company’s history, cuts into Amazon’s white-collar ranks.

While the company still employs more than 1.5 million people worldwide, mostly in warehouses and delivery operations, this development strips away close to one in ten corporate roles. It also leaves the door open to further reductions in subsequent months.

Management says the decision is about speed and proper management. In a message to staff, Amazon’s chief people officer, Beth Galetti, said the company was acting to strengthen itself by “reducing layers, increasing ownership, and removing bureaucracy”.

She added that some teams would continue to “make adjustments as appropriate”, a line that has done little to calm nerves internally.

Under chief executive Andy Jassy, Amazon has been walking away from businesses that failed to justify years of investment. Just days before the layoffs were confirmed, the company said it would shut its remaining Amazon Fresh grocery shops and Amazon Go convenience stores, and abandon its Amazon One palm-scan payment system.

All three had been pitched as bold bets on the future of retail. None delivered at scale.

The cuts span much of the company. Staff in Amazon Web Services, Alexa, Prime Video, devices, advertising and last-mile delivery have reported being affected.

An internal email, sent in error to some employees, appeared to label the restructuring “Project Dawn”, a phrase that quickly spread across internal chats and unsettled thousands of workers, particularly within AWS. Amazon declined to explain the reference.

This is the second major round of layoffs in just three months. In October, Amazon said it would eliminate 14,000 corporate jobs, noting over-hiring during the pandemic and a need to adapt to rapid changes in how work gets done.

“As we roll out more Generative AI and agents, it should change the way our work is done. We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs,” Jassy wrote to staff last summer.

Amazon says this does not mean a new cycle of constant job cuts, both corporate and other jobs. Galetti addressed that concern, saying: “Some of you might ask if this is the beginning of a new rhythm – where we announce broad reductions every few months. That’s not our plan.”

Still, she confirmed Amazon would continue to review teams and reshape them where needed.

Beyond Seattle, the impact is being felt globally. Employees in India are expected to be hit harder in this phase, particularly in AWS and Prime Video, according to people familiar with the matter.

That shows a big transition, as Amazon concentrates resources on fewer, more profitable lines while pushing automation more into its operations. The company has already invested heavily in robotics across its warehouses to cut expenses and speed up deliveries.

Amazon is not alone. Across Big Tech, the post-pandemic hiring spree is being unwound. Meta, Microsoft and Google have all trimmed staff as they redirect cash and talent towards advanced computing and automation.

Outside tech, UPS, Pinterest and ASML have also announced layoffs in recent days. At the World Economic Forum in Davos last week, executives acknowledged that while new jobs will emerge, automation is already changing who companies need, and how many.

For investors, the market reaction was muted. Amazon shares edged up slightly in pre-market trading ahead of the company’s quarterly results next week.

For employees, many affected workers will be given time to apply for internal roles, while those who leave will receive severance and benefits.

The e-commerce giant posted third-quarter revenue of $180.2 billion, up 13% year-on-year, surpassing analyst expectations of $177.8 billion. 

Earnings per share stood at $1.95, beating the projected $1.57, while operating income reached $17.4 billion, a figure that would have climbed to $21.7 billion if not for one-time charges, including a $25 billion Federal Trade Commission (FTC) settlement and $1.8 billion in severance costs.

AWS led the growth, generating $33 billion in revenue, up 20.2%, its highest rise since 2022. 

The Amazon cloud arm now contributes more than 60% of Amazon’s total operating income despite representing just around 15–17% of overall sales. 

CEO Andy Jassy credited the growth to surging demand for artificial intelligence and core infrastructure services.

“AWS is growing at a pace we haven’t seen since 2022,” Jassy said. “We continue to see strong demand in AI and core infrastructure, and we’ve been focused on accelerating capacity.”

The company plans to increase its capital expenditure to about $125 billion this year, with even higher spending expected in 2026. Most of this investment will target AI infrastructure, mirroring similar commitments from Microsoft, Alphabet, and Meta, which are also ramping up spending on chips and data centres.

Despite a challenging week that saw a prolonged AWS outage disrupt several major platforms, Amazon cloud performance outshone expectations. Analysts estimate AWS revenue growth at 17.95%, making the 20% rise a strong recovery.

The performance has put Amazon back among the top-performing tech giants, reversing a period of underwhelming stock performance that had made it the weakest among the so-called “Magnificent Seven.”

Ethan Feller, a stock strategist at Zacks Investment Research, observed that the report reflects a renewed operational strength:

“The report confirms Amazon’s operations are firing on all cylinders after a year of relative underperformance. Despite the stock’s nearly flat growth this year, the company’s fundamentals never meaningfully weakened.”

Amazon projected fourth-quarter net sales between $206 billion and $213 billion, above the $208.12 billion average forecast compiled by LSEG. Jassy’s tone during the earnings call was notably upbeat.

“I look at the momentum we have right now, and I believe that we can continue to grow and click like this for a while,” he said. “I think there are multiple places where we can expect to continue to grow,” he added, citing advertising and retail segments.

Advertising has become a powerful revenue engine, rising 24% year-over-year to $17.7 billion, supported by sponsored listings and new ad formats on Echo Show screens and smart shopping carts. 

Meanwhile, North American sales grew 11% to $106.3 billion, and international sales climbed 14% to $40.9 billion.

However, Amazon’s restructuring continues. The company confirmed it had cut 14,000 corporate jobs, part of a larger plan that could affect up to 30,000 roles. Jassy clarified that the layoffs were not financially or AI-driven.

“It’s culture,” he explained. “Our growth created too many layers of workers and it can lead to slowing you down.”

The job cuts came alongside the one-time $25 billion FTC settlement over allegations that Amazon misled consumers about Prime membership cancellations.

Nonetheless, Amazon’s outlook remains strong. With AWS revenue surging, advertising expanding, and e-commerce stabilising ahead of the holiday season, the company appears stable for continued growth, even as global trade issues weigh on consumer trust.

The company confirmed this on Tuesday, saying the layoffs are part of a restructuring aimed at simplifying operations and enhancing focus on its long-term priorities.

Beth Galetti, Amazon’s senior vice president of People Experience and Technology, said in a company blog post, “The reductions we’re sharing today are a continuation of this work to get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we’re investing in our biggest bets and what matters most to our customers’ current and future needs.”

The cuts will affect various divisions across Amazon’s corporate structure, including its human resources unit, known internally as People Experience and Technology (PXT), as well as operations, devices, services, and Amazon Web Services (AWS). 

According to people familiar with the matter, some managers were briefed on Monday and trained on how to handle employee notifications, which began rolling out Tuesday morning.

This new round of layoffs follows a series of job reductions that began in late 2022, when the company eliminated about 27,000 corporate positions due to slowing growth after the pandemic boom. 

At the time, CEO Andy Jassy described the move as necessary to “right-size” the company following years of rapid expansion.

In recent months, Jassy has doubled down on efforts to reduce what he calls “excess bureaucracy.” He previously launched an internal anonymous feedback line that led to over 450 process changes, all aimed at improving efficiency. 

The CEO also hinted in June that advances in automation and artificial intelligence could reduce the need for certain corporate functions, noting that Amazon was “still larger than it needs to be” following its pandemic-era hiring spree.

The company’s focus on automation and AI-driven productivity has already begun to change its workforce. Sky Canaves, an eMarketer analyst, said, “This latest move signals that Amazon is likely realising enough AI-driven productivity gains within corporate teams to support a substantial reduction in force.”

While the 14,000 layoffs represent less than 5% of Amazon’s 350,000-strong corporate workforce, internal projections seen by Reuters suggest the number could eventually climb to as high as 30,000, depending on business priorities and financial outcomes in the coming quarters.

Amazon currently employs about 1.55 million people worldwide, including warehouse and logistics workers. Despite these corporate reductions, the company still plans to hire about 250,000 seasonal workers ahead of the holiday shopping season, maintaining the same hiring scale as the past two years.

The announcement comes just days before Amazon’s third-quarter earnings report, scheduled for Thursday.

Analysts expect modest growth in AWS, the company’s most profitable arm, after it reported a 17.5% year-over-year increase last quarter, lagging behind competitors Microsoft Azure and Google Cloud.

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.

Unveiled during Amazon’s annual AWS conference in Las Vegas, these cutting-edge tools will enable the company to compete with the likes of Adobe and Meta.

Chief Executive Officer Andy Jassy explained that the new products, branded as “Nova” models, were developed in response to developer demands for improved latency, reduced costs, and enhanced fine-tuning techniques.

With this, Amazon aims to address reports that it has lagged behind competitors in the fast-advancing AI space.

Rohit Prasad, Amazon’s head of artificial general intelligence, commented on the company’s competitive edge, noting that the Nova models deliver faster speeds and superior capabilities at a competitive price.

“If our offerings are better, customers will naturally choose us,” Prasad stated, asserting Amazon’s prospects to succeed in the AI sector.

One of the features of the innovations, Nova Reel, allows users to generate six-second videos from a single image or text input.

The feature is expected to attract businesses looking to showcase products efficiently, with plans to extend video durations to two minutes in the near future.

Added to these, Amazon introduced Canvas, a tool for creating images from text prompts, and emphasised the inclusion of watermarking to ensure responsible use and prevent the spread of harmful content.

The applications of these tools are wide, ranging from product marketing to enhancing filmmaking workflows. However, issues about copyright infringements remain a worrisome point within the industry.

Beyond visual content, Amazon is also focusing on improving the processing and analysis of textual data. In the coming months, the company aims to release a versatile AI model capable of integrating text, images, speech, and video to produce multimodal outputs.

Another highly anticipated development is a revamped version of Amazon’s Alexa voice assistant. Known internally as “Banyan,” the project aims to leverage advanced AI to enhance accuracy and response speed.

Despite delays, Jassy assured that the updated Alexa will be available soon, bolstering the company’s voice assistant technology.

This follows the company’s recently announced five-day in-office mandate, which is set to take effect from January 2025. 

The company had previously allowed a hybrid work arrangement, requiring staff to be in the office three days per week.

Speaking during an all-hands meeting at Amazon’s second headquarters in Arlington, Virginia, Garman emphasised the importance of collaboration and innovation enabled through in-person work. 

He noted that employees who prefer remote work could explore other opportunities at companies that offer such arrangements. “We want to work together in an environment that promotes teamwork and innovation, which is hard to achieve remotely,” Garman stated.

This aligns with Amazon’s leadership principles, which Garman argued are best experienced in an office setting. He pointed out that these principles, such as “disagree and commit,” become challenging to follow effectively through virtual meetings. 

Garman further noted that many employees he had spoken to were supportive of the policy, with nine out of ten reportedly welcoming the change.

Amazon’s return-to-office policy has been objected to by some employees, particularly those who argue they are just as productive working from home.

It’s been pointed out that the mandate increases commuting time and adds unnecessary pressure on families and caregivers. An internal Slack channel advocating for remote work has garnered support from thousands of Amazon employees.

The decision to enforce a full return to office comes at a time when the company is striving to maintain its competitive edge in key areas such as cloud computing and artificial intelligence. 

While rivals like Microsoft, Meta, and Google have maintained more flexible hybrid work policies, Amazon has taken a different line, with CEO Andy Jassy announcing the return-to-office plan last month.

Despite the resistance from some quarters, Garman describes this new mandate as necessary for Amazon’s continued growth and innovation. He acknowledged that while remote work had been beneficial during the pandemic, the future of Amazon lies in facilitating a more collaborative, in-office culture.

This strategic partnership aims to further advance the development of safer generative AI technologies. Focused on expediting the development of Anthropic’s future foundation models and extending their accessibility to Amazon Web Services (AWS) customers, the agreement encompasses several key components.

Anthropic will harness AWS Trainium and Inferentia chips to construct, train, and deploy its upcoming foundation models. This move leverages the price, performance, scale, and security advantages of AWS. Furthermore, the two companies will collaborate on the evolution of Trainium and Inferentia technology.

AWS will become the primary cloud provider for Anthropic, particularly for mission-critical tasks such as safety research and foundation model development. Anthropic plans to migrate the majority of its workloads to AWS, thereby benefiting from the cutting-edge technology offered by the world’s leading cloud provider.

Anthropic commits to providing AWS customers worldwide with access to future iterations of its foundation models through Amazon Bedrock, AWS’s fully managed service that offers secure access to top-tier foundation models. Additionally, Anthropic will grant AWS customers early access to unique features for model customization and fine-tuning.

The partnership heralds exciting possibilities for both companies. Amazon developers and engineers will gain access to Anthropic models through Amazon Bedrock, enabling them to incorporate generative AI capabilities into their projects. This move is poised to enhance existing applications and cultivate entirely new customer experiences across Amazon’s diverse business ventures.

Amazon CEO Andy Jassy expressed his optimism about the collaboration, emphasizing the potential of Amazon Bedrock and AWS Trainium to deliver enhanced value to customers. He stated, “Customers are quite excited about Amazon Bedrock, AWS’s new managed service that enables companies to use various foundation models to build generative AI applications on top of, and our collaboration with Anthropic should help customers get even more value from these two capabilities.”

Dario Amodei, Co-founder and CEO of Anthropic, echoed this sentiment, highlighting the significance of using AWS’s Trainium chips to develop future foundation models. The partnership expansion builds upon Anthropic’s earlier support of Amazon Bedrock and aims to unlock new possibilities for organizations of all sizes.

Anthropic has rapidly evolved into a global leader in foundation model provision and a staunch advocate for the responsible deployment of generative AI. Their foundation model, Claude, excels in a wide array of tasks while maintaining reliability and predictability. Claude’s impressive capabilities span industries from manufacturing and aerospace to finance, legal, and healthcare. Customers have reported a higher degree of control and reliability with Claude compared to other foundation models.

The partnership’s resources will assist customers in harnessing the potential of Claude and Claude 2 on Amazon Bedrock. These AI models are already transforming industries such as travel, asset management, and legal services. With early access to model customization features and fine-tuning capabilities, customers can further tailor these models to their specific needs.

The collaboration between AWS and Anthropic marks another significant step in AWS’s generative AI offerings. Customers can access a wide range of foundation models, customize them to protect their data privacy, and seamlessly integrate them into their AWS workloads through Amazon Bedrock. The partnership strengthens AWS’s position across all layers of the generative AI stack, including hardware, foundation models, and applications and services.

As part of this collaboration, AWS and Anthropic are dedicating substantial resources to help customers leverage Claude and Claude 2 on Amazon Bedrock. The AWS Generative AI Innovation Center will provide support for organizations of all sizes, enabling them to develop innovative AI-powered applications and drive transformation within their businesses.

Both Amazon and Anthropic are active advocates for the responsible development and deployment of AI technologies. They participate in numerous organizations and initiatives, including the OECD AI working groups, GPAI, the Partnership on AI, ISO, NIST, and the Responsible AI Institute. Their commitment to fostering AI’s safe, secure, and responsible advancement is further exemplified by their voluntary commitment to support ethical AI development.

This partnership signifies Amazon’s dedication to enhancing its AI capabilities, making AI accessible and responsible. The future of generative AI holds exciting prospects for AWS customers and beyond.

On its annual planning process for 2023, the e-commerce and cloud giant says the uncertain economic condition in the world today has made this year’s review difficult.

It also affirmed that it had put employees in the know about the reduction since last year, but the number is the surprise. “In November, we communicated the hard decision to eliminate a number of positions across our Devices and Books businesses, and also announced a voluntary reduction offer for some employees in our People, Experience, and Technology (PXT) organization. I also shared that we weren’t done with our annual planning process and that I expected there would be more role reductions in early 2023,” Andy Jassy, CEO of Amazon wrote.

Starting on January 18, the CEO said the affected employees will be communicated with and appreciating them beforehand, he said: “To those impacted by these reductions, I want you to know how grateful I am for your contributions to Amazon, and the work you have done on behalf of customers. You have made a meaningful difference in a lot of customers’ lives. To those who will continue on the journey with us, I look forward to partnering with you to keep making life better and easier for customers every day and relentlessly inventing to do so.”

Speaking further, the CEO explained that these changes will help Amazon pursue its long-term opportunities with a stronger cost structure, with hopes that the company will remain inventive, resourceful, and scrappy in this time of not hiring expansively and eliminating some roles. 

“Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year. We often talk about our leadership principle Invent and Simplify in the context of creating new products and features. There will continue to be plenty of this across all of the businesses we’re pursuing. But, we sometimes overlook the importance of the critical invention, problem-solving, and simplification that goes into figuring out what matters most to customers (and the business), adjusting where we spend our resources and time, and finding a way to do more for customers at a lower cost (passing on savings to customers in the process). Both of these types of Invent and Simplify really matter.”