Amazon CEO sees AI spending 'meaningfully' higher in 2027
Amazon will spend meaningfully more than $220 billion on AI infrastructure in 2027 even as free cash flow sinks.
TL;DR
- Amazon is significantly increasing its capital expenditure for AI data centers.
- The company plans $220 billion in capital expenditure for 2026, with expectations of spending "meaningfully more" in 2027.
- This spending is driven by high demand for AI infrastructure, including massive data centers and expensive chips.
- Amazon's free cash flow has turned negative, showing a $42.4 billion hole over the trailing twelve months.
- Investors are concerned about the scale of spending, though CEO Andy Jassy remains confident in attractive financial returns.
- AWS revenue grew 39.3% year over year in the third quarter, its fastest growth in nearly five years.
- Jassy stated that demand for large AI deployments is visible years in advance, supporting the company's investment strategy.
- The rapid pace of the AI market necessitates large, upfront investments rather than spread-out spending.