Amazon.com has announced plans for substantial capital expenditures in 2026, joining its tech counterparts in a race to enhance artificial intelligence (AI) capabilities. The e-commerce giant anticipates investing approximately US$200 billion, a notable increase from prior projections of US$144.67 billion, signalling a strong commitment to AI infrastructure development.
Big Tech’s Spending Surge
The competition among leading tech companies is intensifying, with the top four hyperscalers—Amazon, Microsoft, Alphabet’s Google, and Meta—expected to collectively invest over US$500 billion this year. This wave of investment is largely directed toward processors, data centres, and networking equipment, essential components for building robust AI infrastructures.
In recent earnings reports, Wall Street’s message to these firms has been clear: while aggressive spending on AI is welcomed, it must be accompanied by tangible operational and financial returns. For instance, Google’s ambitious capex forecast of US$175 billion to US$185 billion received shareholder approval thanks to strong growth in its cloud revenue. Conversely, Microsoft faced a backlash after its cloud unit’s performance barely exceeded expectations, leading to stock declines.
Amazon’s Strategic Investments
As the largest cloud services provider globally, Amazon is experiencing significant demand for both AI infrastructure and core digital migration services. However, industry-wide capacity constraints have hindered its ability to fully satisfy this demand. To address these challenges, Amazon has increased its investments, notably in the fourth quarter, launching the “Rainier” AI infrastructure project. This initiative has rolled out nearly 500,000 of its proprietary Trainium2 chips, primarily for use by Anthropic, the developer of the Claude chatbot.
Although Amazon Web Services (AWS) represents a smaller segment of the company’s operations—accounting for only 15% to 20% of total sales—it generates over 60% of Amazon’s operating profit. This highlights the critical role that AWS plays in Amazon’s overall financial health.
E-commerce Enhancements
In addition to bolstering its cloud capabilities, Amazon is also focusing on its e-commerce sector. The company is striving to attract more customers by expanding into rural areas across the United States, enhancing its same-day and next-day delivery services, and intensifying its efforts within the perishable foods market. Recent moves include an expansion of the Whole Foods footprint and the introduction of a 225,000-square-foot mega-store designed to rival giants like Walmart and Costco.
Why it Matters
Amazon’s ambitious capital expenditure plans reflect a broader trend within the tech industry, where AI investments are becoming crucial for future growth. As companies navigate capacity constraints and demand fluctuations, their ability to deliver solid returns will be vital for maintaining investor confidence. Amazon’s strategy not only underscores its commitment to AI but also demonstrates its intent to remain competitive in both cloud services and e-commerce, which are increasingly intertwined in today’s digital economy.
