Unfazed by the impact of DeepSeek! Amazon invests $100 billion in AI, CEO Andy Jassy: a rare opportunity.

Despite the low-cost progress of DeepSeek, which has dealt a blow to Western giants, it does not prevent them from increasing their investments in an attempt to seize the initiative in this transformation. Amazon recently announced that it will significantly increase capital expenditure (CapEx) to $100 billion by 2025 to strengthen its artificial intelligence (AI) infrastructure, demonstrating a strong confidence in the prospects of the AI market. However, there are still doubts in the market about whether this investment wave can bring high returns, leading to a decline in Amazon's stock price.

Amazon's ambitious $100 billion investment to deepen its AI development

Amazon CEO Andy Jassy announced on Thursday's earnings call that the company plans to increase capital expenditures to $100 billion by 2025, far exceeding the approximately $83 billion in 2024. Jassy predicted as early as October last year that investment in 2025 will reach a new high, mainly driven by the surge in demand for Generative AI.

To strengthen its AI competitiveness, Amazon is actively investing in data centers, cloud computing, AI chips, and related infrastructure, and launching a variety of AI products, such as Nova large language models, Trainium AI chips, AI shopping assistants, and the Bedrock platform for third-party AI models.

Technology giants AI arms race upgrade

Not only Amazon, but other tech giants are also increasing their investment in the AI field, sparking a capital expenditure arms race:

Google's parent company Alphabet: Capital expenditure is expected to reach $75 billion in 2025, focusing on the development of AI-related technologies and infrastructure.

Microsoft: In the 2025 fiscal year, it will invest $80 billion, primarily for expanding AI data centers to support its collaboration with OpenAI.

Meta (Facebook's parent company ): plans to invest $65 billion, focusing on AI computing infrastructure and data center expansion.

These investments not only demonstrate that AI has become a core strategic focus for tech companies, but also draw market attention to the capital return of the AI industry.

Market concerns about Amazon's returns result in a drop in stock price.

Despite Amazon delivering better-than-expected revenue and profit in the fourth quarter of 2024, the sales forecast for the first quarter of 2025 is lower than Wall Street analysts' expectations, causing investors to raise concerns, and Amazon's after-hours stock price fell by more than 4%.

Jassy tried to appease the market during the earnings call, emphasizing that AI investments will bring "rare business opportunities" and will bring returns in the long run for the company, customers, and shareholders. "Whether it's our business, customers, or shareholders, they will be satisfied with this AI investment in the medium to long term. This year, we will also invest in the retail business to further improve logistics and delivery speed and reduce operational costs." However, the market remains cautious about whether the AI spending war will bring actual returns.

The rise of the Chinese startup DeepSeek has raised questions about the prospects of AI investment

In addition to the market's doubts about the returns on large-scale investment in AI, a breakthrough by the Chinese AI startup DeepSeek has further prompted investors to reassess the necessity of AI investment.

DeepSeek claims that they only spent less than 6 million dollars and two months to successfully train the R1 model, which performs comparably to OpenAI's o1 model. In contrast, tech giants often invest billions of dollars to build AI models, making the market shocked by such capital efficiency differences.

As a result, the stock prices of chip giants Nvidia and Broadcom plummeted last week, with the combined market value evaporating by $80 billion, indicating that investors are beginning to re-examine the rationality of AI-related capital expenditures.

AI investment enters a crucial period Can Amazon win?

With the escalation of AI competition, whether Amazon's $100 billion investment can bring the expected return remains to be verified by time. Facing challenges from Microsoft, Google, Meta, and the rise of AI startups such as DeepSeek, Amazon's ability to stand firm in the AI battlefield will become the focus of the market's attention.

In the future, the focus of AI investment will no longer be just 'spending money to buy computing power', but how to improve technological innovation and capital efficiency. Whoever can grasp this key will stand out in this AI revolution.

This article is not afraid of the impact of DeepSeek! Amazon invests 100 billion US dollars in AI. CEO Andy Jassy: A rare opportunity appeared first on Chain News ABMedia.