Amazon and Alphabet's AI Investments: A Must-Know for Shareholders

As an investor, it's crucial to stay informed about the companies you've put your money into. Amazon (AMZN) and Alphabet (GOOGL)(GOOGL) shareholders, take note: there's one undeniable truth you must understand about these tech giants' AI investments. Both companies are planning to spend a significant amount of money on artificial intelligence (AI) infrastructure in 2025, with Alphabet planning $75 billion and Amazon around $100 billion in capital expenditures. This unprecedented spending is primarily focused on cloud infrastructure, which is crucial to AI proliferation.



Now, you might be wondering why these companies are pouring so much money into AI. The answer lies in the massive growth potential of the AI market and the need to stay ahead of the competition. As Amazon's CEO Andy Jassy puts it, "It's the way that AWS business works and the way the cash cycle works is that the faster we grow, the more capex we end up spending because we have to procure data center and hardware and chips and networking gear ahead of when we're able to monetize it." In other words, to meet the coming demand, both Amazon and Alphabet have to get in front of it. Otherwise, potential customers will go to a different provider.