Amazon CEO Andy Jassy thinks companies should invest “aggressively” in AI now to reap the full financial rewards in the future.
In his annual letter to Amazon shareholders published Thursday, Jassy said “substantial capital” is required to keep up with the pace of AI innovation and customer demand for AI products. He added that Amazon, too, needs to spend this money now if it hopes to see strong returns on its investment years down the line.
Jassy’s comments come after Amazon announced plans during its fourth-quarter earnings call in February to spend more than $100 billion on capital expenditures in 2025. The “vast majority” of that sum will be put toward AWS AI capabilities, Jassy said at the time.
“We continue to believe AI is a once-in-a-lifetime reinvention of everything we know,” Jassy wrote in his shareholder letter. “The demand is unlike anything we’ve seen before, and our customers, shareholders, and business will be well-served by our investing aggressively now.”
Jassy said the biggest AI expenses are currently data centers and chips, but he added that, over time, this infrastructure will start to cost less.
“In AWS, the faster demand grows, the more data centers, chips, and hardware we need to procure (and AI chips are much more expensive than CPU chips),” Jassy wrote. “We spend this capital upfront, even though these assets are useful for many years.”
Jassy offered Amazon’s own Trainium2 chips as an example that prices will go down for AI infrastructure over time. He added that these chips offer 30%-40% better price-performance than the current GPU-powered computing instances generally available today. Trainium2 was released in late 2024.
Jassy also said that AI price dynamics will change in the future as the training costs for AI come down and money is instead put toward inference, or actually serving AI models.
“We feel strong urgency to make inference less expensive for customers,” Jassy wrote. “More price-performant chips will help. But, inference will also get meaningfully more efficient in the next couple of years with improvements in model distillation, prompt caching, computing infrastructure, and model architectures.”
Amazon is currently building more than 1,000 generative AI applications, Jassy said in the shareholder letter. He added that Amazon’s AI revenue is growing at “triple-digit” year-over-year percentages and represents a “multi-billion-dollar annual revenue run rate.”
Amazon declined to comment further.
