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Amazon has predicted a substantial increase in capital expenditure, stating it may invest up to $200bn in 2026 as it accelerates its initiatives to expand its artificial intelligence infrastructure.
The announcement, made alongside its latest earnings report on Thursday, unsettled investors and caused the company’s shares to fall about 10% in after-hours trading. The projected expenditure would amount to nearly double the level expected for 2025 and underscores Amazon’s determination to compete with Microsoft and Google in the rapidly evolving AI market.
Chief executive Andy Jassy described the moment as “a very unusual opportunity”, saying most of the investment would be directed towards Amazon Web Services (AWS), the firm’s cloud computing division. The funds are expected to support large-scale data centres, specialised chips and the computing capacity needed to train advanced AI models.
Despite the market reaction, Amazon reported impressive quarterly results. Net sales increased by 12% to $187.5bn, while operating income more than tripled to $15.2bn. Revenue at AWS reached $28.9bn, surpassing expectations, with growth accelerating to 19% year on year as businesses boosted spending on generative AI tools. However, the scale of the planned investment overshadowed the results, with some analysts questioning how quickly the company can generate returns.
Read also: IMF Raises Global Growth Forecast as AI Boom Offsets Trade Headwinds
Building AI infrastructure
Amazon said it would spend between $100bn and $110bn in 2025 alone, largely on AI-focused servers, cooling systems, and energy supplies for new facilities. The company is also investing in its own chips, including the Trainium and Inferentia processors, which are designed to handle AI workloads more efficiently and reduce reliance on external suppliers.
Mr Jassy said the strategy is driven by rapidly growing demand, noting that many large organisations are experimenting with AI systems that require vast computing power. He pointed to the rise of so-called “agentic AI”, in which software can carry out complex tasks with minimal human input.
“We’re investing aggressively because the foundation models are reaching a tipping point,” he told analysts during the earnings call.
AWS now hosts a significant share of corporate AI trials, with companies such as Anthropic and Stability AI expanding their use of the platform.
Concerns over costs
Some investors remain cautious, warning that such heavy spending could affect free cash flow if AI adoption slows or the broader economy weakens. While global growth is expected to remain steady, uncertainty about trade policy and inflation continues to cloud the outlook.
The sell-off briefly erased roughly $200bn from Amazon’s market value and contributed to a broader decline in technology stocks. Rival firms are facing similar scrutiny, with Microsoft due to report results soon and Alphabet signalling substantial AI-related spending of its own.
Analysts are divided on Amazon’s strategy. Some see the investments as necessary in what has been described as an “infrastructure arms race”, while others warn that execution risks are rising and that sustained high spending may be difficult to justify.
Regulation, jobs and energy demand
The expansion is also drawing attention from regulators. US authorities are examining competition in the cloud sector, while European rules under the Digital Markets Act could impose penalties on dominant technology companies.
Amazon has begun hiring thousands of engineers to support its cloud and AI operations, reflecting the shift in skills required as artificial intelligence becomes central to its business.
Energy consumption remains a challenge. The company has committed to sourcing its electricity from renewable sources, but the rapid expansion of data centres has sparked debate over whether the clean energy supply can keep up.
Amazon’s latest forecast highlights the scale of the industry’s gamble on artificial intelligence. With technology firms collectively planning to invest hundreds of billions of pounds, the coming years will likely reveal whether these investments transform the global economy — or test investor patience if profits take longer to appear.
