Amazon’s Investment in AI and Digital Advertising Growth
Amazon is set to invest approximately $125 billion in capital expenditures this year, focusing on building data centers and developing chips to enhance its artificial intelligence (AI) capabilities. This significant spending is vital for maintaining its competitiveness in the rapidly evolving tech landscape, alongside companies like Microsoft and Alphabet.
In the third quarter, Amazon Web Services (AWS) generated $33 billion in revenue, contributing $11.4 billion in operating income. AWS is experiencing boosted demand for AI tools, notably from clients like OpenAI. Additionally, Amazon’s digital advertising revenue surged 22% year-over-year, reaching $17.7 billion, indicating robust growth prospects in the sector.
Despite a market cap of $2.4 trillion, Amazon shares are currently trading at a low valuation of 30.5 times its earnings before interest and taxes (EBIT), near a decade low, potentially offering room for valuation upside as investors focus on positive financial developments.
