Big tech companies are increasing their investments in artificial intelligence, contrary to predictions that lower costs would lead to reduced spending. Amazon announced a massive $100 billion predicted capital expenditure for its cloud division AWS in 2025, with most of the funds going towards enhancing AI capabilities.
Amazon CEO Andy Jassy stated that decreased prices due to cost savings would actually drive up demand for AI services, benefiting AWS and the company’s revenue. This approach is being echoed by other major tech players, including Meta and Alphabet. The latter has increased its 2025 capex by 42%, while Microsoft plans to spend $80 billion on AI data centers alone.
Despite concerns about the long-term impact of Jevon’s Paradox, which suggests that lower prices lead to increased demand, there is currently no indication that Big Tech will slow down its AI spending. The companies’ confidence in their strategies and commitment to investing heavily in AI indicate a strong future for these technologies.
Source: https://techcrunch.com/2025/02/06/amazon-doubles-down-on-ai-with-a-massive-100b-spending-plan-for-2025