Amazon Doubles Down on AI With a $100 Billion Spending Plan for 2025

Despite speculation that AI budgets might shrink, Big Tech shows no signs of slowing down. Instead, companies are ramping up spending, with Amazon leading the charge.

Amazon’s $100 Billion AI Push

Amazon has announced a massive AI investment, forecasting over $100 billion in capital expenditures for 2025. CEO Andy Jassy confirmed that the “vast majority” of this budget will be allocated to AWS AI capabilities. In Q4 2024 alone, Amazon spent $26.3 billion on capex, suggesting an annualized spend of $105.2 billion for 2025—an increase from $78 billion in 2024.

AI Cost Reductions Will Drive Demand

Jassy dismissed concerns that declining AI costs would hurt Amazon’s revenue. He argued that lower prices would increase demand, much like previous technological revolutions in the internet and cloud computing.

Other Tech Giants Follow Suit

Amazon isn’t alone in its aggressive AI investments. Other major players are significantly increasing their spending:

• Meta plans to invest at least $60 billion in 2025, with CEO Mark Zuckerberg predicting “hundreds of billions” in long-term AI investments.
• Alphabet raised its 2025 capex budget by 42% to $75 billion, with CEO Sundar Pichai emphasizing the growing feasibility of AI applications.
• Microsoft will allocate $80 billion to AI data centers in 2025.

Jevons Paradox and the Future of AI Spending

Microsoft CEO Satya Nadella referenced Jevons Paradox—the economic theory that increased efficiency leads to higher demand—suggesting that AI’s affordability will fuel its adoption. Whether this theory holds true remains to be seen, but for now, AI spending shows no signs of slowing down.