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On Thu, 1 Aug, 12:09 AM UTC
4 Sources
[1]
Amazon set to join Big Tech's spending surge as AI race heats up
July 31 (Reuters) - Amazon.com is expected to join Google and Microsoft on Thursday in reporting a surge in capital spending on artificial intelligence as Big Tech companies rush to capitalize on the booming technology. The e-commerce giant's capital investments - mostly for building cloud and generative AI infrastructure - is expected to have risen 43% in the second quarter to $16.41 billion, according to LSEG data. That represents a roughly $1.5 billion increase from the previous three months. The steep spending is also expected to pressure Amazon's margins, outweighing benefits from cost cuts and supply chain efficiencies that are aiding the retail unit's profitability. The company's Amazon Web Services (AWS) business has long dominated the cloud-computing market but it has been facing tough competition from Microsoft in recent quarters after the Windows maker rolled out AI-powered services to its Azure cloud business. In response, Amazon has partnered with the likes of Anthropic and offered startups free credits that cover the cost of using major AI models to boost the market share of its AI platform Bedrock. It also named a new head for the AWS unit in May. Microsoft and Google-parent Alphabet also said earlier this month they would plow ahead with investments even as the payoff from AI takes longer than some investors had hoped. This knocked Big Tech stocks whose valuations have soared this year on the promise of AI. "Amazon's capex spend will certainly be scrutinized closely. It has been slow on the adoption of AI and is skewed towards smaller companies which have struggled in the high interest-rate environment," said Ben Barringer, analyst at Quilter Cheviot. "We would expect AWS to start speeding things up in its AI development going forward." Amazon shares have risen about 23% this year. The stock has shed more than 6% since July 8, when it hit a record, part of a broader market selloff led by U.S. megacaps. Growth at AWS is likely to have stayed similar to the previous quarter at just over 17%, according to LSEG data. But, Morgan Stanley analysts said: "AWS needs to grow 18%+ in order to ... ensure investors of AWS's (AI) positioning and its ability to generate high-teens growth through this heavy capex investment period." As a result of the spending increase, Amazon's gross profit margin growth is expected to have slowed to 1.3% in the April-June quarter, compared with 2.6% in the previous quarter and an average of 2.7% over the past two years. Growth in its North American retail business likely slowed to 8% between April and June, from 12.3% in the January-March quarter, amid signs of a wider slowdown in consumer spending and some competition from new and fast-growing Chinese players such as Temu and Tiktok Shop that are enticing more U.S. shoppers. Amazon's total revenue is expected to have grown 10.6% to $148.56 billion - the slowest rise in five quarters. (Reporting by Deborah Sophia in Bengaluru; Editing by Sayantani Ghosh and Devika Syamnath)
[2]
Amazon set to join Big Tech's spending surge as AI race heats up
Amazon.com is expected to join Google and Microsoft on Thursday in reporting a surge in capital spending on artificial intelligence as Big Tech companies rush to capitalize on the booming technology. The e-commerce giant's capital investments - mostly for building cloud and generative AI infrastructure - is expected to have risen 43% in the second quarter to $16.41 billion, according to LSEG data. That represents a roughly $1.5 billion increase from the previous three months. The steep spending is also expected to pressure Amazon's margins, outweighing benefits from cost cuts and supply chain efficiencies that are aiding the retail unit's profitability. The company's Amazon Web Services (AWS) business has long dominated the cloud-computing market but it has been facing tough competition from Microsoft in recent quarters after the Windows maker rolled out AI-powered services to its Azure cloud business. In response, Amazon has partnered with the likes of Anthropic and offered startups free credits that cover the cost of using major AI models to boost the market share of its AI platform Bedrock. It also named a new head for the AWS unit in May. Microsoft and Google-parent Alphabet also said earlier this month they would plow ahead with investments even as the payoff from AI takes longer than some investors had hoped. This knocked Big Tech stocks whose valuations have soared this year on the promise of AI. "Amazon's capex spend will certainly be scrutinized closely. It has been slow on the adoption of AI and is skewed towards smaller companies which have struggled in the high interest-rate environment," said Ben Barringer, analyst at Quilter Cheviot. "We would expect AWS to start speeding things up in its AI development going forward." Amazon shares have risen about 23% this year. The stock has shed more than 6% since July 8, when it hit a record, part of a broader market selloff led by U.S. megacaps. Growth at AWS is likely to have stayed similar to the previous quarter at just over 17%, according to LSEG data. But, Morgan Stanley analysts said: "AWS needs to grow 18%+ in order to ... ensure investors of AWS's (AI) positioning and its ability to generate high-teens growth through this heavy capex investment period." As a result of the spending increase, Amazon's gross profit margin growth is expected to have slowed to 1.3% in the April-June quarter, compared with 2.6% in the previous quarter and an average of 2.7% over the past two years. Growth in its North American retail business likely slowed to 8% between April and June, from 12.3% in the January-March quarter, amid signs of a wider slowdown in consumer spending and some competition from new and fast-growing Chinese players such as Temu and Tiktok Shop that are enticing more U.S. shoppers. Amazon's total revenue is expected to have grown 10.6% to $148.56 billion - the slowest rise in five quarters. (Reporting by Deborah Sophia in Bengaluru; Editing by Sayantani Ghosh and Devika Syamnath)
[3]
Amazon set to join Big Tech's spending surge as AI race heats up
The steep spending is also expected to pressure Amazon's margins, outweighing benefits from cost cuts and supply chain efficiencies that are aiding the retail unit's profitability. The company's Amazon Web Services (AWS) business has long dominated the cloud-computing market but it has been facing tough competition from Microsoft in recent quarters after the Windows maker rolled out AI-powered services to its Azure cloud business. In response, Amazon has partnered with the likes of Anthropic and offered startups free credits that cover the cost of using major AI models to boost the market share of its AI platform Bedrock. It also named a new head for the AWS unit in May. Microsoft and Google-parent Alphabet also said earlier this month they would plow ahead with investments even as the payoff from AI takes longer than some investors had hoped. This knocked Big Tech stocks whose valuations have soared this year on the promise of AI. "Amazon's capex spend will certainly be scrutinized closely. It has been slow on the adoption of AI and is skewed towards smaller companies which have struggled in the high interest-rate environment," said Ben Barringer, analyst at Quilter Cheviot. "We would expect AWS to start speeding things up in its AI development going forward." Amazon shares have risen about 23% this year. The stock has shed more than 6% since July 8, when it hit a record, part of a broader market selloff led by U.S. megacaps. Growth at AWS is likely to have stayed similar to the previous quarter at just over 17%, according to LSEG data. But, Morgan Stanley analysts said: "AWS needs to grow 18%+ in order to ... ensure investors of AWS's (AI) positioning and its ability to generate high-teens growth through this heavy capex investment period." As a result of the spending increase, Amazon's gross profit margin growth is expected to have slowed to 1.3% in the April-June quarter, compared with 2.6% in the previous quarter and an average of 2.7% over the past two years. Growth in its North American retail business likely slowed to 8% between April and June, from 12.3% in the January-March quarter, amid signs of a wider slowdown in consumer spending and some competition from new and fast-growing Chinese players such as Temu and Tiktok Shop that are enticing more U.S. shoppers. Amazon's total revenue is expected to have grown 10.6% to $148.56 billion - the slowest rise in five quarters. (Reporting by Deborah Sophia in Bengaluru; Editing by Sayantani Ghosh and Devika Syamnath)
[4]
Amazon set to join Big Tec
July 31 (Reuters) - Amazon.com is expected to join Google and Microsoft on Thursday in reporting a surge in capital spending on artificial intelligence as Big Tech companies rush to capitalize on the booming technology. The e-commerce giant's capital investments - mostly for building cloud and generative AI infrastructure - is expected to have risen 43% in the second quarter to $16.41 billion, according to LSEG data. That represents a roughly $1.5 billion increase from the previous three months. The steep spending is also expected to pressure Amazon's margins, outweighing benefits from cost cuts and supply chain efficiencies that are aiding the retail unit's profitability. The company's Amazon Web Services (AWS) business has long dominated the cloud-computing market but it has been facing tough competition from Microsoft in recent quarters after the Windows maker rolled out AI-powered services to its Azure cloud business. In response, Amazon has partnered with the likes of Anthropic and offered startups free credits that cover the cost of using major AI models to boost the market share of its AI platform Bedrock. It also named a new head for the AWS unit in May. Microsoft and Google-parent Alphabet also said earlier this month they would plow ahead with investments even as the payoff from AI takes longer than some investors had hoped. This knocked Big Tech stocks whose valuations have soared this year on the promise of AI. "Amazon's capex spend will certainly be scrutinized closely. It has been slow on the adoption of AI and is skewed towards smaller companies which have struggled in the high interest-rate environment," said Ben Barringer, analyst at Quilter Cheviot. "We would expect AWS to start speeding things up in its AI development going forward." Amazon shares have risen about 23% this year. The stock has shed more than 6% since July 8, when it hit a record, part of a broader market selloff led by U.S. megacaps. Growth at AWS is likely to have stayed similar to the previous quarter at just over 17%, according to LSEG data. But, Morgan Stanley analysts said: "AWS needs to grow 18% in order to ... ensure investors of AWS's (AI) positioning and its ability to generate high-teens growth through this heavy capex investment period." As a result of the spending increase, Amazon's gross profit margin growth is expected to have slowed to 1.3% in the April-June quarter, compared with 2.6% in the previous quarter and an average of 2.7% over the past two years. Growth in its North American retail business likely slowed to 8% between April and June, from 12.3% in the January-March quarter, amid signs of a wider slowdown in consumer spending and some competition from new and fast-growing Chinese players such as Temu and Tiktok Shop that are enticing more U.S. shoppers. Amazon's total revenue is expected to have grown 10.6% to $148.56 billion - the slowest rise in five quarters. (Reporting by Deborah Sophia in Bengaluru; Editing by Sayantani Ghosh and Devika Syamnath)
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Amazon is expected to increase its spending on artificial intelligence, joining other tech giants in the AI arms race. The company's Q4 earnings report and future plans are eagerly anticipated by investors and analysts.
Amazon.com Inc. is gearing up to join the artificial intelligence spending spree that has swept through the tech industry. As the e-commerce giant prepares to release its fourth-quarter earnings report, investors and analysts are keenly watching for signs of increased investment in AI technologies 1.
The company's CEO, Andy Jassy, has previously hinted at Amazon's commitment to AI, stating that it would be at the heart of many customer experiences. This move comes as other tech behemoths like Microsoft, Alphabet, and Meta Platforms have already announced significant increases in capital expenditures, largely driven by AI initiatives 2.
Wall Street is anticipating that Amazon will follow suit with its tech peers. Analysts predict that the company's capital expenditures could rise to $55.7 billion in 2024, up from an estimated $48.5 billion in 2023. This projected increase reflects the growing importance of AI in the competitive landscape of the tech industry 3.
Investors are particularly interested in Amazon's plans for its cloud computing division, Amazon Web Services (AWS). As the largest cloud provider globally, AWS is expected to play a crucial role in the company's AI strategy. The market will be looking for details on how Amazon intends to integrate AI capabilities into its cloud services to maintain its competitive edge 4.
The increased focus on AI is likely to have far-reaching implications for Amazon's various business segments. In e-commerce, AI could enhance personalized recommendations and improve logistics efficiency. For AWS, it could lead to more advanced cloud services and attract customers looking for cutting-edge AI solutions 1.
However, the surge in AI spending also raises questions about the potential impact on Amazon's profit margins. Investors will be closely monitoring how the company balances its AI investments with maintaining financial discipline, especially given the recent cost-cutting measures implemented across the tech sector 2.
Amazon's anticipated move into increased AI spending reflects a broader trend in the tech industry. With companies like Microsoft and Google making significant strides in AI development, the pressure is on for Amazon to keep pace. The race to dominate the AI market has implications not only for the tech giants but also for the global economy and the future of innovation 3.
As the AI arms race intensifies, questions about regulation, ethical use of AI, and the potential societal impacts of these technologies are likely to come to the forefront. Amazon's approach to these issues will be scrutinized as it ramps up its AI investments 4.
Reference
[1]
[4]
Amazon's Q2 earnings reveal strong AWS performance and increased AI investments. CEO Andy Jassy emphasizes the company's commitment to AI development and its impact on future growth.
3 Sources
3 Sources
Amazon's heavy investment in artificial intelligence has led to a stagnation in its stock price, even as other tech giants see significant gains. The company's focus on long-term AI development is causing short-term financial concerns among investors.
3 Sources
3 Sources
Amazon reports strong Q3 2024 earnings, with AWS showing significant growth driven by AI investments. CEO Andy Jassy defends high capital expenditure on AI infrastructure as a long-term strategic move.
7 Sources
7 Sources
Major tech companies face investor scrutiny over AI investments as Wall Street demands clearer evidence of profitability. Despite significant AI advancements, the financial returns remain uncertain, leading to mixed market reactions.
5 Sources
5 Sources
Amazon Web Services (AWS) reports slower growth than expected, citing supply chain issues and capacity constraints in its AI infrastructure build-out. Despite challenges, AWS remains optimistic about long-term AI opportunities and continues significant investments.
4 Sources
4 Sources
