Amazon doubles down on AI with a massive $100B spending plan for 2025 – TechCrunch
NEW YORK, NEW YORK - NOVEMBER 30: Andy Jassy on stage at the 2022 New York Times DealBook on November 30, 2022 in New York City. (Photo by Thos Robinson/Getty Images for The New York Times)
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Despite all the buzz last week that DeepSeek would herald in an era of lower AI budgets, there is zero sign that Big Tech is slowing down. Instead, they’re ramping things up. Amazon is the latest tech giant to announce a massive AI spending plan, with well over $100 billion in predicted capital expenditures for 2025. The “vast majority” of that $100 billion will go toward AI capabilities for its cloud division AWS, CEO Andy Jassy said during Amazon’s fourth-quarter earnings call Thursday. (More specifically, Jassy said Q4 2024’s capex spending of $26.3 billion “is reasonably representative” of what to expect on an annualized basis in 2025. Multiplying that quarterly spend by four gets a cool $105.2 billion.)That’s a huge jump from the $78 billion in capex that Amazon spent in 2024. Amazon brushed aside concerns about AI getting so cheap that it would harm its revenue. Instead, Jassy said lower prices would just lead to increased demand for AI. And AWS, which has AI offerings galore, stands to benefit, he argued.“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,” Jassy said, comparing the boom in AI demand to the early days of the internet and cloud.Other Big Tech companies are making the same point this earnings season as worries mount about the returns on their skyrocketing AI expenses.Meta CEO Mark Zuckerberg declared last week the company would spend “hundreds of billions” on AI in the long term, citing rising inference demand across its billions of users. Meta is slated to spend at least $60 billion on capex in 2025, mostly on AI.Meanwhile, Alphabet just boosted its capex for 2025 by a whopping 42% to $75 billion, with CEO Sundar Pichai justifying the spending by saying that decreased AI costs “will make more use cases feasible.”And Microsoft announced last month that it would spend $80 billion on AI data centers in 2025 alone. Microsoft CEO Satya Nadella even tweeted the Wikipedia page for Jevons Paradox (the concept in economics that lower prices leads to increased demand) right as the DeepSeek discussion was heating up.Jevons paradox strikes again! As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of. https://t.co/omEcOPhdIzWhether Jevons Paradox pans out for Big Tech this time remains to be seen. But for now, there’s no signs of any AI spending slowdown just yet.TechCrunch has an AI-focused newsletter! Sign up here to get it in your inbox every Wednesday.Topics
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