Amazon to Increase Capex Budget Amid AI Push
Amazon has announced a significant increase in its capital expenditure (capex) budget for 2026, raising it from $200 billion to $220 billion, primarily to construct new data centers and enhance artificial intelligence (AI) infrastructure. CEO Andy Jassy emphasized that despite current financial pressures, this investment is expected to yield substantial returns in the long run.
In the last 12 months, Amazon experienced a free cash flow outflow of $7.6 billion, driven by a $66.1 billion spike in property and equipment costs largely attributed to AI. The company’s cloud division, Amazon Web Services (AWS), generated $42.2 billion in revenue for the quarter, reflecting a 37% year-on-year growth, and operating income surged 64% to $16.6 billion. Jassy also indicated that AWS could evolve into a trillion-dollar annual revenue business, underscoring the extensive market potential for AI solutions.
Amazon’s ramped-up investment in data centers is a strategic move intended to meet the escalating demand for AI capabilities, even as Jassy foresees capacity constraints persisting into 2027. This sustained focus aims to position Amazon for long-term growth in a competitive landscape.
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