"Amazon said Thursday it plans a staggering $200 billion in capital expenditures this year, sparking concern that the AI spending boom has entered an even more bubbly stage. The company's capex forecast was more than $50 billion above Wall Street expectations. That left some analysts uneasy about whether these huge investments will pay off. "The strong long-term return on investing capital - I think that's the debate in the market today," Mark Mahaney, a tech analyst at Evercore ISI, said during a conference call with Amazon executives following the results."
"Amazon CEO Andy Jassy said new AI capacity is being monetized as quickly as it is deployed, calling it "a very unusual opportunity," and argued that AI adoption is accelerating customers' shift to the cloud. He added that AWS' experience forecasting demand helps limit wasted capacity. "This isn't some sort of quixotic top-line grab," Jassy said during the call. "We have confidence that these investments will yield strong returns on invested capital.""
"Jassy's comments did little to calm investors. Amazon shares fell more than 10% in extended trading after the company detailed its outsized spending plans. A profit forecast also missed Wall Street expectations, adding to ROI concerns. Big Tech's AI infrastructure buildout has entered a new, breathtaking phase in recent days. On Wednesday, Google said it expects capex of $175 billion to $185 billion in 2026, well ahead of Wall Street estimates. Meta and Microsoft also raised capex."
Amazon plans $200 billion in capital expenditures this year, roughly $50 billion more than analysts expected. AWS revenue growth accelerated, but the company provided a profit forecast that missed Wall Street expectations. Executives attributed the surge in spending to rapid AI adoption and said new AI capacity is being monetized as it is deployed, with AWS forecasting helping limit wasted capacity. Analysts expressed unease about whether such massive investments will deliver strong long-term returns on invested capital. Shares fell more than 10% after the results, and other big tech firms are also raising capex for AI infrastructure.
Read at Business Insider
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