Though investors have been bullish on artificial intelligence (AI) stocks over the past few years, in recent times, they’ve started to worry about one thing in particular: spending. The concern is that cloud companies may build out too much capacity — and then be left with this extra infrastructure, and the costs it involves, if demand falters.
This risk, along with the high valuations of many growth stocks, has periodically weighed on AI stocks. We saw a pullback amid these concerns back in November, for example. So, it’s not too surprising that last week, when Amazon (NASDAQ: AMZN) announced its plan for $200 billion in 2026 capital spending, in part to address AI demand, the stock immediately slipped in pre-market trading.
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But if you’re worried about Amazon’s AI spending, consider the following nine words from chief executive officer Andy Jassy. They should ease your mind — and even encourage you to get in on Amazon shares.
First, let’s take a quick look at how Amazon fits into the AI story. You may know the company best for its e-commerce business, but Amazon also is present in the world of cloud computing. In fact, Amazon Web Services (AWS) is the global leader in this industry. Customers come to AWS for a variety of services, but AI has driven growth in recent times.
AWS offers AI customers everything they need for their projects: from its in-house-developed chips that appeal to cost-conscious customers to high-end chips from market leader Nvidia. AWS also sells access to a fully managed service, Amazon Bedrock, that allows customers to adapt popular large language models to their needs.
All of this has driven tremendous growth at AWS. In the recent quarter, Amazon reported a $142 billion annual revenue run rate for AWS as the unit’s revenue soared 24%. That’s the strongest growth rate in 13 quarters.
Now, let’s consider Jassy’s words. “Customers really want AWS for core and AI workloads,” he said during the company’s earnings call.
The fact that customers are turning to AWS for both non-AI and AI projects suggests that even if AI demand slips, Amazon could still generate growth through non-AI projects. This should ease your mind if you worry about a slowdown in AI growth.
On top of this, Jassy said that as the company adds new capacity, it’s monetizing it immediately. All of this should reassure investors as Amazon begins this new wave of spending, as it shows that the company isn’t entirely dependent on AI demand — and is quickly delivering returns on its investments.
