Amazon CEO promises that investments in AI will yield returns as capital expenditures increase by 81%.

• In the third quarter, Amazon's capital expenditures increased by 81% compared to the same period the previous year.
• Andy Jassy, CEO, assured shareholders that the company anticipates earning profits from its investments in generative artificial intelligence.
• Jassy stated on the earnings call that he believes our customers, business, and shareholders will be pleased with our long-term prospects due to our aggressive pursuit of this.

Andy Jassy, CEO, is addressing investor concerns about the future returns on the company's significant investments in AI technology.

During a conference call with analysts discussing Amazon's third-quarter earnings report on Thursday, Jassy highlighted the success of Amazon Web Services, which has become a vital source of revenue despite the high costs of constructing data centers.

"Jassy stated that we have demonstrated our ability to generate sufficient operating income and free cash flow to make this business a successful return on investment, and we anticipate the same outcome with generative AI."

In the quarter, Amazon spent $22.6 billion on property and equipment, representing an 81% increase from the previous year. Jassy announced that Amazon plans to invest $75 billion in capital expenditures in 2024 and anticipates an even higher amount in 2025.

Generative AI investments are the main reason for the increase in spending, Jassy stated. The company is quickly investing in data centers, networking equipment, and hardware to meet the growing demand for the technology, which has gained immense popularity since OpenAI released its ChatGPT assistant almost two years ago.

"Jassy stated that the opportunity was exceptionally large and rare, and he believed that customers, the business, and shareholders would be pleased with the long-term outcome of aggressively pursuing it."

This week, AI spending was a major topic during tech earnings calls. On Wednesday, raised its capital expenditures guidance, and CEO Mark Zuckerberg expressed satisfaction with the team's performance. Meanwhile, OpenAI investment weighed on 's fiscal first-quarter earnings, which were released on Wednesday. Additionally, Alphabet CFO Anat Ashkenazi warned that the company anticipates capital spending to increase in 2025.

Recently, Amazon's cloud unit has gained more business from companies that require infrastructure to deploy generative AI models. Additionally, the company has introduced several AI products for enterprises, third-party sellers on its marketplace, and advertisers in recent months. It is predicted that Amazon will soon release an enhanced version of its Alexa voice assistant that integrates generative AI, as Jassy announced it will arrive "in the near future."

Jassy stated on Thursday that generative AI within AWS has become a "multi-billion-dollar revenue run rate" business that is growing at a triple-digit year-over-year percentage, although Amazon has not disclosed its revenue from this area.

He stated that the growth rate of the company was more than three times faster than AWS's growth rate during its evolution stage, and he felt that AWS grew quickly.

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