Amazon Plans $200 Billion AI Investment Amid CEO's Assurance of Long-Term Rewards

Amazon CEO Andy Jassy stated on CNBC's 'Mad Money' that the company's massive spending on artificial intelligence is not something investors should fear and will reward them over time. Jassy described AI as the biggest technology transformation in our lifetimes, adding that it is going to reinvent every single customer experience we know and altogether new ones we never imagined.

In February, Amazon announced plans to invest $200 billion this year in capital expenditures, largely tied to AI infrastructure.

The disclosure, made alongside fourth-quarter earnings, caused shares to tumble. The stock took roughly two months to erase all of its post-earnings declines in early April, but it has kept climbing higher since then and set a new record close on Monday. Amazon is projected to have negative free cash flow in 2026, according to FactSet.

Jassy countered concerns by noting that after the first three years of this incarnation of AI, Amazon's run rate is over $15 billion, which is 260 times what it was in the first three years of AWS. AWS is expected to generate total revenue of roughly $166 billion this year, according to FactSet.

Jassy, who replaced Jeff Bezos as Amazon's companywide CEO in 2021, stated that critics misunderstand how Amazon makes money from these investments because the company has to lay out capital and cash in advance of when it can monetize it.

He explained that investments in data centers and infrastructure are made years before they generate revenue and those assets have multiyear long lifespans, allowing Amazon to generate returns over an extended period. In a CNBC interview, Jassy also stated that Amazon has a strong collaboration with Nvidia.