Hajra Naz
Despite last week’s speculation that DeepSeek’s advancements could usher in an era of reduced AI budgets, there’s no indication that Big Tech is slowing down. They’re accelerating their investments.
Amazon is the most recent giant to unveil an enormous AI-focused investing plan, anticipating over $100 billion in capital expenditures for 2025. According to CEO Andy Jassy, the “vast majority” of that investment will be piped into improving AI capabilities inside its cloud division, AWS. Jassy made this declaration amid Amazon’s fourth-quarter profit call on Thursday.
To put that figure into perspective, Jassy highlighted that Amazon’s capex investing in Q4 2024 came to $26.3 billion—a number he said is a “reasonably representative” indicator of the company’s annualized consumption for 2025. Simple math suggests that multiplying that quarterly spending by four brings Amazon’s total expected capex to approximately $105.2 billion for the year.
This marks a substantial leap from the $78 billion Amazon spent in 2024, emphasizing the company’s aggressive AI expansion.
Lower AI Costs Won’t Hurt Revenue—They’ll Drive More Demand
Amazon dismissed concerns that falling AI costs could undercut its revenue. Instead, Jassy argued that as AI becomes more affordable, demand will only increase—benefiting AWS, which already boasts a wide array of AI-powered services.
“Sometimes people assume that if the cost of a technology component drops, overall tech spending will shrink. But we’ve never seen that happen,” Jassy explained, likening today’s AI boom to the early days of the internet and cloud computing, where lower costs spurred even greater adoption.
Big Tech’s Relentless AI Investment
Amazon isn’t alone in its forceful AI investing spree. Other tech monsters are making comparable moves, strengthening the conviction that AI’s falling costs will fuel even more ventures, not less.
Last week, Meta CEO Mark Zuckerberg declared that the company plans to contribute “hundreds of billions” into AI over the long term, with at least $60 billion distributed for 2025 alone—primarily to support its developing AI framework and deduction requests over its massive user base.
Meanwhile, Alphabet (Google’s parent company) has expanded its capital use projection for 2025 by a stunning 42%, pushing it to $75 billion. CEO Sundar Pichai justified the boost by stating that lower AI costs will “make more use cases feasible,” leading to expanded adoption.
Microsoft is also following suit, with plans to spend $80 billion on AI data centers in 2025 alone.
Microsoft CEO Satya Nadella even referenced Jevons Paradox—an economic concept suggesting that technological efficiency improvements often lead to increased demand rather than reduced consumption. As the debate over DeepSeek’s potential impact on AI pricing heated up, Nadella tweeted a link to the Wikipedia page on Jevons Paradox, reinforcing the idea that AI’s growing efficiency will only drive further adoption.
Whether this theory will hold for Big Tech’s AI ambitions remains to be seen. But for now, there’s no indication of a slowdown in AI investments—only an acceleration.
