Amazon shares slide as $200 billion outlay fans fears over AI returns

Amazon Chief ⁠Executive Andy Jassy was defending Amazon Web Services’ revenue growth of 24% that was slower than rivals ​Google Cloud’s 48% growth and Microsoft’s Azure 39% rise.

Amazon.com shares slid 9% on Friday after the company outlined a planned $200 billion capital outlay ‍for the year, stoking investor concerns about the scale of Big Tech’s spending on artificial intelligence.

Amazon ​on Thursday joined rivals in forecasting sharply higher expenditures this year, ‌as U.S. tech giants now aim to pour more than $630 billion ​into data centres and the AI chips that power them, an unprecedented level of investment.

Investors expected the companies to ramp up spending after they pinned their futures to the technology, but some analysts said the size of the increases surprised the market and raised questions about whether returns can keep pace.

“While the rising capital intensity is not a surprise directionally, the magnitude of the spend is materially greater than ​consensus expected,” MoffettNathanson analysts said, referring to Amazon’s prediction for a 50% ⁠outlay jump.

The surge in spending has revived comparisons with the dot-com era boom of the early 2000s, which helped build the modern internet but delivered only modest returns for many companies that financed ​the underlying infrastructure.

Amazon’s forecast also landed ⁠amid broader volatility tied to AI expectations. Shares of Microsoft and Alphabet , Amazon’s two biggest cloud rivals, fell after their earnings, even as new technology from the AI startups they back triggered a rout in software stocks and intensified ‌a debate over an existential threat to the sector.