While Wall Street has grown cautious about runaway AI costs, Amazon benefits from strong demand for AI and cloud services through AWS, which generates most of its operating profit.
| Photo Credit:
Dado Ruvic
Amazon.com on Thursday joined
its Big Tech peers in projecting massive capital expenditures in
2026, the freshest sign yet that tech companies will not be
hitting the brakes on their hefty AI investments anytime soon.
The company said it expects to invest about $200 billion in
capital expenditures across Amazon in 2026, compared with an
estimate of $144.67 billion, according to data compiled by LSEG.
Big Tech is spending enormous amounts of money on
processors, data centers and networking equipment as the
companies rush to build out their AI infrastructure. The top 4
hyperscalers – Amazon, Microsoft, Alphabet’s Google
and Meta – are expected to collectively spend
more than $500 billion this year.
But tech earnings over the past few days have shown that
Wall Street has a clear message for tech companies: Soaring AI
spending can continue only if companies show commensurate
operational or financial returns.
Google’s eye-watering capex forecast of $175 billion to $185
billion for the year got a pass from investors as the company
delivered stellar growth in its cloud revenue, as did Meta’s
plan to spend between $115 billion and $135 billion.
But investors punished Microsoft’s stock last week after its
cloud unit growth just squeaked past estimates.
For Amazon, the largest cloud services provider in the
world, enterprise demand for both AI infrastructure and core
digital migration workloads has been strong, even as
industrywide capacity constraints limit its ability to fully
meet the demand.
The company invested heavily in the fourth quarter to ease
those constraints. It launched its AI infrastructure project
“Rainier”, bringing nearly half a million of its in-house
Trainium2 chips online, primarily for use by Claude
chatbot-maker Anthropic.
Although a smaller unit for Amazon, contributing just 15% to
20% to overall sales, AWS generates over 60% of the company’s
operating profit.
Amazon has also been investing in its e-commerce business,
seeking to draw more customers by expanding to rural areas in
the United States, boosting its same-day and next-day delivery
capabilities and deepening its push into perishable foods.
The company has been making major changes in its retail
division, the latest bet being an expansion of its Whole Foods
footprint and a 225,000-square-foot mega-store meant to compete
with the likes of Walmart and Costco.
Published on February 6, 2026