AI plans include $200bn in capital expenditures
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Andy Jassy. Image: Amazon
The tech giant posted quarterly revenue of $213 billion (+14%), driven mainly by growth at AWS and in advertising.
Over time, the online retailer has evolved from seller to trading platform and now to facilitator of commerce and digital construction. As a result, only 42% of revenue now comes from retail via its own online and offline platform (bricks-and-mortar shops).
Amazon saw revenue at its cloud division rise by 24% to $35.6 billion (17% of the total). That is the strongest growth in more than four years. Advertising recorded growth of 22% to $21 billion. For the full year, the total comes to $68 billion. At the current pace, Advertising will reach or surpass $100 billion in 2026.
In its quarterly report, Amazon attempted to paint the picture that it is a major player in the AI chip business. But where it was a frontrunner in the cloud world, in the US scene it now seems to be an underdog fighting its way back from the rear. The company has close ties with Anthropic, as it is a shareholder.
“AWS growing 24% (our fastest growth in 13 quarters), Advertising growing 22%, Stores growing briskly across North America and International, our chips business growing triple digit percentages year-over-year – this growth is happening because we’re continuing to innovate at a rapid rate, and identify and knock down customer problems,” said Andy Jassy, president and CEO, Amazon. “With such strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low earth orbit satellites, we expect to invest about $200 billion in capital expenditures across Amazon in 2026, and anticipate strong long-term return on invested capital.”
The news did not impress investors, with share prices dipping 10% following the announcement.
Amazon announced in recent days that it will cut 16,000 jobs worldwide in what is the company’s second major round of redundancies in three months. The cuts are part of a broader reorganisation to tackle overcapacity built up after the pandemic and to increase the adoption of artificial intelligence (AI) within the company.
In October last year, Amazon laid off 14,000 office staff, with CEO Andy Jassy stressing that the company wants to reduce operational layers and cut the number of managers.
Although these 30,000 positions represent only a small share of Amazon’s more than 1.5 million employees, they amount to around 10% of the corporate workforce, which is estimated at about 350,000 people.
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