Amazon Spends $200 Billion on AI Amid Cloud Competition

Amazon is undertaking its largest-ever capital spending program, set to reach $200 billion this year.

This effort is being launched as part of a strategic reset due to fears that Amazon’s cloud business, AWS, is losing out to rivals in landing corporate artificial intelligence contracts, the Financial Times (FT) reported Saturday, citing more than a dozen current and former senior employees.

The report came a little more than a week after Amazon CEO Andy Jassy announced the company’s capital expenditure would come to $200 billion for 2025, more than that of Google and Microsoft, with spending focused on computing infrastructure.

“We have deep experience understanding demand signals in the AWS business and then turning that capacity into a strong return on invested capital,” Jassy said earlier this month. “We’re confident this will be the case here as well.”

AWS employees said the company’s moves also reflected an in-house worry that it had not fully capitalized on its lead in cloud computing, especially by being slower than competitors to secure major contracts with AI providers following OpenAI’s debut of ChatGPT in 2022.

“We were just not fully prepared for how fast things would unfold,” said one former senior AWS employee.

Amazon told FT it was inaccurate “to infer that AWS was unable to secure major compute deals or was at a disadvantage when it comes to capacity planning. AWS continues to earn most of the big enterprise and government transitions to cloud.”

According to FT, AWS is still the world’s largest cloud provider, generating nearly $130 billion in sales last year and more than 60% of Amazon’s profits. However, analysts have forecast that AI-powered cloud services will allow Microsoft’s cloud unit to overtake AWS in the next three years.

Per the report, Amazon said other companies did not report “true cloud figures” and make it hard to get an accurate comparison between cloud businesses.

In other Amazon news, PYMNTS wrote last week about the company’s expansion of its pay-by-bank service to the U.K., a country where consumers are highly familiar with bank-initiated payments, and regulatory frameworks explicitly support account-to-account commerce.

“Against that backdrop, Amazon’s move carries weight beyond its own checkout,” the report said. “It signals that pay by bank has matured enough to be deployed at scale by a global platform. For the broader payments ecosystem, the message is that direct-from-bank payments are no longer peripheral.”