IBL News | New York
In the latest announcement by big tech giants embarking on the race for AI, Amazon said it will spend $200 billion this year on data centers, satellites, and other big-ticket items.
Also, this month, Google’s parent company Alphabet, announced it will invest as much as $185 billion this year, while Meta said that its capital expenses, in large part to support AI, can reach $135 billion.
Investors’ worries that the hundreds of billions on AI data centers could take years to pay off aren’t affecting tech giants, who show little sign of slowing down.
The combined annual capital spending plans of Amazon, Microsoft, Meta, and Google have passed half a trillion dollars.
The problem, they say, is that they still don’t have enough data centers up and running to meet customers’ demand for AI, along with the subsequent increase in demand for traditional cloud services.
Amazon’s CEO said in a statement that “strong demand for our existing offerings and seminal opportunities like AI, chips, robotics, and low-earth orbit satellites” were the reasons for the spending spree.
Amazon said its sales passed $200 billion for the first time, reaching $213.4 billion in the last three months of the year, more than Wall Street expected and up 14 percent from a year earlier. Profit grew 6 percent to $21.2 billion, slightly less than Wall Street expected.
Amazon’s cloud computing division saw sales grow 24 percent to $35.6 billion as the business gained momentum after initially lagging in the A.I. race. It was the fastest growth in about three years.
Amazon’s willingness to invest in what it believes to be its future stands in stark contrast to major cost-cutting at The Washington Post, which is owned by Amazon’s founder, Jeff Bezos, who is the board chair. The Post slashed its newsroom on Wednesday, laying off more than 300 of the roughly 800 journalists.
Mr. Bezos is Amazon’s largest shareholder, with more than $200 billion worth of stock. He is also investing heavily in his rocket company, Blue Origin, which is competing with Elon Musk’s SpaceX for government contracts.