“We are not going to play this game cautiously. We are investing to be the true leader and to build the business of the future. Our operating profits and cash flow will grow substantially from this.”,
Amazon CEO Andy Jassy stated in his annual shareholder letter last Thursday that the company's massive AI investment is "worth it" and will serve as a key foundation for future growth.
Earlier in February, Amazon revealed plans to invest about $200 billion in capital expenditures this year, primarily toward AI infrastructure such as data centers, processing chips, and networking equipment. This figure surpasses all industry competitors and represents nearly a 60% increase from the previous year.
Due to the size of this increased investment plan, Amazon's stock performance this year has been unremarkable, as investors began questioning the seemingly "overly aggressive" strategy and grew impatient waiting for returns.
However, following the release of the shareholder letter, Amazon's shares immediately jumped, closing up 5.6%. Since the start of the year, Amazon's stock has gained approximately 1%.
Andy Jassy explained in the letter that Amazon must invest heavily to "seize a once-in-a-lifetime opportunity and meet the soaring demand for AI applications." He reiterated that Amazon's AI Cloud business currently generates $15 billion in annual revenue.
"We are not investing nearly $200 billion in 2026 on mere speculation," Jassy said, adding that there are already large deals and customers lined up to support future revenue. Investments exceeding $100 billion from OpenAI and Amazon have been secured with strong customer commitments, ensuring returns on these investments.
The company expects to generate revenue from most of these investments starting next year and continuing through 2028.
Another standout business is Amazon's chip division, covering Graviton processors, Trainium AI chips, and Nitro architecture. Andy Jassy noted this business now earns over $20 billion annually and is growing at triple-digit rates compared to last year.
Additionally, Andy Jassy, who became CEO in 2021, recalled founder Jeff Bezos's philosophy, stating "Long-term growth matters more than short-term profits."
Looking back, Amazon endured years of losses in its early days, during which Jeff Bezos urged investors to remain confident despite testing market patience. The company heavily invested in cloud, warehouses, and equipment, ultimately achieving profits and dominating new markets.
Jassy concluded by saying Amazon is accelerating the creation of "new business pillars" that will drive future growth, including the chip business, grocery, fast delivery services, and the early-stage satellite internet project Leo.
"We are prepared to invest massive amounts and endure short-term cash flow pressures in exchange for substantial medium- to long-term gains," Andy Jassy concluded.
Follow the Facebook page: Thairath Money at this link -https://www.facebook.com/ThairathMoney