Amazon CEO Defends $200B AI Spending as Revenue Run Rate Hits $15B

✴︎

4.10.2026

Quick Facts

Amazon plans $200 billion in capital expenditures for 2026, mostly for AI infrastructure
AWS AI revenue reached $15 billion annual run rate, growing 260 times faster than early AWS
Company’s free cash flow dropped from $38 billion to $11 billion due to AI investments

Amazon CEO Andy Jassy defended the company’s massive artificial intelligence spending in his annual shareholder letter, released April 9. The letter addresses growing investor concerns about the $200 billion capital expenditure plan for 2026.

“We’re not investing approximately $200 billion in capex in 2026 on a hunch,” Jassy wrote. “AI is a once-in-a-lifetime opportunity where the current growth is unprecedented and the future growth even bigger.”

The AI revenue numbers back up Jassy’s confidence. AWS’s AI segment hit a $15 billion annual run rate in the first quarter of 2026. That represents growth 260 times larger than AWS achieved at the same point in its development cycle.

Amazon’s custom chip business, including Graviton processors and Trainium AI chips, reached a $20 billion annual revenue run rate with triple-digit year-over-year growth. The company had to turn down two large customers who wanted to buy all available Graviton CPU capacity this year.

The massive spending has hurt Amazon’s cash position. Free cash flow dropped from $38 billion to $11 billion last year. Capital spending increased by $50.7 billion, primarily for AI infrastructure.

Jassy said Amazon has received customer commitments for “a substantial portion” of the capital expenditure spending. OpenAI committed over $100 billion, and Amazon expects to monetize most investments in 2027 and 2028.

Amazon shares fell 2.54% following the announcement. The stock trades down 10.54% year-to-date at $206.48. Morgan Stanley maintained an overweight rating with a $300 price target, while Bernstein and Benchmark trimmed targets over capital expenditure sustainability concerns.

The company announced plans to spend $12 billion on new data centers in Mississippi, bringing total state investment to $25 billion. AWS added 3.9 gigawatts of new power capacity in 2025 and plans to double total capacity by the end of 2027.

“We’re not going to be conservative in how we play this — we’re investing to be the meaningful leader,” Jassy wrote. “Our future business, operating income, and free cash flow will be much larger because of it.”