Amazon shares dropped sharply after the company unveiled plans to pour $200bn (£147.7bn) into artificial intelligence and infrastructure, marking a major escalation in spending and unsettling investors.
The investment far exceeds the $125bn Amazon spent on AI last year, and the announcement sent its shares down more than 11% in after-hours trading.
Amazon is the latest in a wave of US tech giants ramping up AI investment. This week, Amazon, Meta, Google and Microsoft collectively revealed plans to spend around $650bn this year on AI and related projects. The surge has sparked concerns among some prominent figures in finance and technology that the AI boom could be heading toward a bubble.
Reporting its full-year results on Thursday, Amazon said the funds would go toward “AI, chips, robotics and low Earth orbit satellites.” Speaking to analysts, chief executive Andy Jassy made it clear that AI would take the largest share of the spending.
“It’s an unusual opportunity,” Jassy said, adding that he believes AI will eventually become highly profitable. “I passionately believe every customer experience we have today will be reinvented by AI. We’re going to invest aggressively.”
Investors, however, remain uneasy about the scale of the spending and how long it will take for returns to materialize. Amazon is not alone — Meta and Microsoft also saw their share prices slide this week.
Mary Therese Barton, chief investment officer at Pictet Asset Management, said there were “certainly jitters” in the market. “It’s been a bit of a rupture and a wake-up call, with investors asking whether these AI investments are really going to pay off,” she said.
Concerns about overvaluation have been building for months. Late last year, the governor of the Bank of England warned that Big Tech valuations could face a “sharp correction,” likening current US share prices to the period before the dotcom bubble burst in the early 2000s.
Cisco chief executive Chuck Robbins said the shift to AI would create winners but warned there would be “carnage along the way.” While describing AI as potentially “bigger than the internet,” he suggested the current market is likely a bubble and that some companies “won’t make it.”
JPMorgan Chase chief executive Jamie Dimon also cautioned that a portion of the money flowing into AI would “probably be lost.”
Amazon’s chief financial officer, Brian Olsavsky, said the company is looking to cut costs elsewhere as it ramps up investment. Last week, Amazon laid off another 16,000 employees, following 14,000 job cuts in October.
Other companies racing into AI have struck a similar balance of ambition and caution. Meta chief executive Mark Zuckerberg said in January that the company plans to spend up to $135bn this year, nearly double its 2025 investment. The spending will support AI model training, data centre expansion and chip purchases.
Zuckerberg also noted that AI is already reducing the number of workers needed on large technical projects, predicting that “2026 will be the year AI dramatically changes the way we work.”
Google chief executive Sundar Pichai said his company will invest even more than Meta, more than doubling capital expenditure to $185bn this year as it expands AI-related infrastructure such as servers and data centres.
Microsoft has not disclosed a full-year figure but has already spent more than $72bn on AI talent and infrastructure, with no indication of slowing down.
The broader market has felt the pressure. The S&P 500 fell more than 1% on Thursday, extending a week of losses after hitting an all-time high at the end of January.
