Amazon Chief Executive Andy Jassy said generative AI will "reinvent virtually every customer experience we know" as he defended the tech giant's big AI spending plans in his annual shareholder letter. Amazon stock retreated Thursday as Jassy also discussed Amazon's response to tariffs in a TV interview.
Similar to last year's note to shareholders, Jassy made a case for how AI will drive the e-commerce and cloud-computing companies growth. But Amazon's plan to spend roughly $100 billion on capital expenditures this year is under greater scrutiny by investors following the emergence of lower cost AI models such as those from DeepSeek. Amazon stock has slumped since February.
"Fundamentally, if your mission is to make customers' lives better and easier every day, and you believe every customer experience will be reinvented by AI, you're going to invest deeply and broadly in AI," Jassy wrote.
On the stock market today, Amazon stock shed more than 6% to 179.21 in recent trades. Amazon is falling with the broader market, as the Nasdaq composite was off more than 6% in recent action.
Jassy Defends AI Spending
Jassy organized his letter around a series of questions asking why, including, "Why invest this much this quickly?"
For the Amazon Web Services cloud business, Jassy said spending reflects demand.
"The faster demand grows, the more data centers, chips, and hardware we need to procure (and AI chips are much more expensive than CPU chips)," Jassy said. "We spend this capital up front, even though these assets are useful for many years (in the case of data centers, for at least 15-20 years)."
The company plans to spending significant capital as AI revenue grows at what Jassy called triple-digit year-over-year rates.
"We continue to believe AI is a once-in-a-lifetime reinvention of everything we know, the demand is unlike anything we've seen before, and our customers, shareholders, and business will be well-served by our investing aggressively now," Jassy wrote.
But he added that Amazon hopes it can bring down costs over time for AI, Jassy added. That includes by offering its own "Trainium2" AI chips that compete against those from Nvidia. He added that the process of running data through AI models – called inferencing – will get cheaper over time.
Amazon's Tariff Plan
Jassy's letter comes the day after Amazon stock rallied 12% on news that President Donald Trump paused his plan for "reciprocal" tariffs on all countries for 90 days, with the exception of China.
Still, Amazon stock is slumping as investors fret over a potential trade war between the U.S. and China. The U.S. is imposing a 145% tariff on Chinese imports.
Amazon shares have fallen for each of the past nine weeks and were down 13% year-to-date entering Thursday trading.
Jassy appeared on CNBC Thursday morning and was asked about tariffs. The Amazon leader said that much remained in flux but the company was focused on keeping prices low. Amazon completed what Jassy called "strategic forward inventory buys" for some items, he added.
But sellers would likely pass on costs of tariffs to consumers, Jassy said.
"I mean depending on which country you're in, you don't have 50% extra margin that you can play with," Jassy said. "So I think they'll try and pass the cost on. It's so early right now, but we haven't seen any change in consumer behavior in a meaningful way yet."
Amazon Stock In Nine-Week Slump
The current slump for Amazon stock began with its fourth-quarter results in early February. Amazon beat earnings estimates but offered a lower-than-expected sales forecast for Q1. Shares have tumbled 21% from a record high of 242.52 reached Feb. 4.
You can view Jassy's full letter here.
