Amazon Increases AI Spending Target to $220 Billion for 2026
Amazon has raised its capital expenditure target for artificial intelligence (AI) in 2026 from $200 billion to $220 billion, citing higher memory costs as a key factor. This increase is part of the company's broader investment strategy and was announced alongside strong financial results that showed Amazon outperforming the S&P 500 with over 10% year-to-date gains. The increased spending has not hurt profitability; instead, it contributed to significant revenue growth driven by Amazon Web Services (AWS), which saw its highest annual growth rate in four years. AWS's operating income surged from $10.2 billion a year ago to $16.6 billion this quarter, and both AI and chips businesses have surpassed an annual run rate of $25 billion. The substantial investment also reinforces Amazon’s dominant position in the cloud computing market, where it controls more than 60% alongside Microsoft and Alphabet. This spending is expected to widen its lead over competitors like Oracle while enhancing pricing power for all three hyperscalers as they continue expanding their AI-driven infrastructure.
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Topics: AI Amazon earnings AWS growth capex increase