There is no indication that Big Tech is slowing down. Even last week there was a lot of talk about DeepSeek being the beginning of a period of reduced AI spending. Rather, they are intensifying the situation.
With well over $100 billion in anticipated capital expenditures for 2025, Amazon is the most recent corporate behemoth to reveal a big AI spending plan. During Amazon’s fourth-quarter earnings call on Thursday, CEO Andy Jassy stated that the “vast majority” of that $100 billion would be used to develop AI capabilities for its cloud business AWS.
More precisely, Jassy stated that the $26.3 billion in capital expenditures for the fourth quarter of 2024 “is reasonably representative”. That may be anticipated on an annual basis in 2025. That quarterly expenditure multiplied by four is a cool $105.2 billion.
Compared to Amazon’s 2024 capital expenditures of $78 billion. Amazon dismissed worries that its income might suffer if AI becomes so inexpensive. Rather, Jassy claimed that lowering costs will only raise demand for AI. Additionally, he claimed that AWS, which offers a plethora of AI products, stands to gain.
Jassy also said
“Sometimes people make the assumption that if you’re able to decrease the cost of any type of technology component … that somehow it leads to less total spend in technology. We’ve never seen that to be the case,”.
This earnings season, other large tech companies are voicing similar concerns regarding the returns on their rapidly increasing AI expenditures.
Citing growing demand for inference among its billions of users, Meta CEO Mark Zuckerberg announced last week that the business would invest “hundreds of billions” in AI over the long run. In 2025, Meta plans to invest at least $60 billion in capital expenditures, primarily on AI.
In the meantime, Alphabet has increased its capital expenditures for 2025 by a staggering 42% to $75 billion. Sundar Pichai, the company’s CEO, defended the expenditure by claiming that lower AI costs “will make more use cases feasible.”
Additionally, last month, Microsoft declared that it would invest $80 billion in AI data centers in 2025 alone.
Just as the DeepSeek debate was getting heated, Microsoft CEO Satya Nadella even tweeted the Wikipedia entry for Jevon Paradox, the economic theory that lower costs result in higher demand.
It’s unclear if Jevon’s Paradox will work out for Big Tech this time. However, there are currently no indications of a slowing in AI spending.
