\n<\/p>\n
Amazon $AMZN<\/a> CEO Andy Jassy defended the company’s plan for about $200 billion on capital expenditures in 2026, saying in his annual shareholder letter<\/a> that customer commitments and a once-in-a-generation technology shift back the spending spree.<\/p>\n<\/div>\n “We’re not investing approximately $200 billion in capex in 2026 on a hunch,” Jassy wrote. “We’re not going to be conservative in how we play this. We’re investing to be the meaningful leader, and our future business, operating income, and (free cash flow) will be much larger because of it.”<\/p>\n<\/div>\n Amazon Web Services’ AI business is on pace to book $15 billion in annual revenue, up from essentially nothing three years ago. Across all its services, AWS posted a $142 billion annualized revenue run rate in the final quarter of 2025. Jassy said capacity constraints are further limiting AWS growth, with some customers unable to get the compute they want.<\/p>\n<\/div>\n Heavy investment in AI data centers drove up the company’s capital expenditures by $50.7 billion, leaving free cash flow at $11 billion for the year \u2014 down from $38 billion the year before. On the top line, Amazon closed 2025 at $717 billion, having expanded sales by 12% from the $638 billion recorded in 2024. Operating income rose 17% to $80 billion.<\/p>\n<\/div>\n Among the agreements backing Amazon‘s spending, Jassy pointed to a deal with OpenAI worth more than $100 billion as a signal of the kind of demand his company is banking on. Jassy said additional deals have been signed or are being negotiated \u2014 most of them not yet public \u2014 and that existing customer commitments cover a large share of what Amazon plans to spend this year.<\/p>\n<\/div>\n Amazon‘s custom chip business drew prominent treatment in the letter. Amazon‘s three custom silicon lines \u2014 Graviton, Trainium, and Nitro \u2014 together produce more than $20 billion in annualized revenue, growing at triple-digit pace year over year. Selling those chips on the open market, the way rivals do, would put the business at roughly $50 billion in annual revenue, Jassy estimated. Relying on its own silicon rather than third-party GPUs could shrink the company’s capital outlays by tens of billions annually and push operating margins several hundred basis points higher.<\/p>\n<\/div>\n