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CEOWORLD magazine - Latest - CEO Insights - Amazon CEO Andy Jassy Reassures Investors Over AI Investments as Spending Reached $22.6 Billion This Quarter

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Amazon CEO Andy Jassy Reassures Investors Over AI Investments as Spending Reached $22.6 Billion This Quarter

Amazon CEO Andy Jassy is working to ease investor concerns regarding the company’s substantial investments in generative artificial intelligence (AI), emphasizing the anticipated long-term payoff. During Amazon’s third-quarter earnings call, Jassy highlighted the parallels between Amazon Web Services (AWS) and its current AI investments. He referenced AWS’s journey, which, despite its high costs in data center infrastructure, has evolved into a critical source of profits. Jassy expressed confidence that Amazon’s efforts in generative AI would yield similar returns over time.

Amazon’s capital expenditure reached $22.6 billion this quarter, marking an 81% increase from the previous year. Jassy explained that the company’s capital expenditures, forecasted at $75 billion for 2024 and anticipated to rise further in 2025, are primarily driven by investments in generative AI. Amazon is scaling up its data centers, networking, and hardware to address the rapidly growing demand for AI technologies, a trend that surged with the popularity of tools like OpenAI’s ChatGPT.

Jassy noted the extraordinary nature of this opportunity, describing it as a “once-in-a-lifetime” chance for Amazon. He indicated that customers, shareholders, and the business itself would ultimately appreciate the strategic focus on AI investments.

Generative AI spending has become a central topic in recent tech earnings reports. Meta raised its own capital expenditure forecast, with CEO Mark Zuckerberg expressing satisfaction with the company’s progress, while Microsoft saw its investment in OpenAI affect its fiscal first-quarter earnings. Alphabet CFO Anat Ashkenazi also signaled that capital spending would continue to rise through 2025.

AWS has observed increased demand from businesses seeking infrastructure to support AI model deployment. In response, Amazon has introduced several AI-focused products for enterprises, marketplace sellers, and advertisers and is expected to unveil an upgraded Alexa voice assistant powered by generative AI “in the near future,” according to Jassy.

While Amazon has not disclosed specific revenue from generative AI, Jassy described it as a “multi-billion-dollar revenue run rate” business within AWS, adding that it is achieving triple-digit year-over-year growth. He noted that its current growth rate is more than three times faster than AWS’s, which was at a similar stage, underscoring his belief in the rapid and significant impact of Amazon’s AI initiatives.

 

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CEOWORLD magazine - Latest - CEO Insights - Amazon CEO Andy Jassy Reassures Investors Over AI Investments as Spending Reached $22.6 Billion This Quarter
Anna Siampani
Anna Siampani, Lifestyle Editorial Director at the CEOWORLD magazine, working with reporters covering the luxury travel, high-end fashion, hospitality, and lifestyle industries. As lifestyle editorial director, Anna oversees CEOWORLD magazine's daily digital editorial operations, editing and writing features, essays, news, and other content, in addition to editing the magazine's cover stories, astrology pages, and more. You can reach Anna by mail at anna@ceoworld.biz