Amazon's AI Spending Sparks New Business Model as Revenue Growth Accelerates

Amazon's massive investment in artificial intelligence (AI) infrastructure is generating revenue and creating new sources of demand, rather than just supporting its existing business model. The company spent $131 billion on capital expenditures in 2025, up from $83 billion in 2024, and initially expected around $200 billion for 2026. However, it later raised this figure to approximately $220 billion following its second-quarter results.

AWS revenue jumped 37% year-over-year to $42.2 billion in the second quarter, its fastest growth in 18 quarters, while AWS operating income increased to $16.6 billion from $10.2 billion. Amazon also said its AI and chips businesses each surpassed a $25 billion annual revenue run rate.

CEO Andy Jassy has stated that much of the company's 2026 AWS capital spending is already backed by customer commitments, with much of that capacity expected to be monetized in 2027 and 2028. This suggests that the infrastructure is becoming a revenue-producing asset rather than just an expense line.

The retail math may also be changing, as Evercore ISI's survey found that 57% of Alexa AI users purchased products they previously didn't know about. This 'agentic AI' can intervene earlier in the customer's purchasing process by understanding their needs and introducing new products.