Amazon and Microsoft won't stop record AI spending

Between the two of them, Amazon and Microsoft will likely spend about $390 billion this year on artificial intelligence investments.

Despite lingering questions about AI's return on investment, Amazon and Microsoft are not budging from the position that their mass allocation of resources toward high-tech computer chips and data centers will be worth it.

Both companies - along with their cloud computing competitor Google - reported financial results for the first three months of the year on Wednesday. Those three, as well as fellow tech giant Meta, all posted strong earnings, beating analysts' estimates on revenue and profit.

But the market gave mixed reactions.

After earnings reports dropped at around 1 p.m., Amazon's stock price slid in after-hours trading. Then it fluctuated until the company's call with analysts at 2:30 p.m. and rose until it was up 2.57% as of 5 p.m. Microsoft's fell and rose, off-and-on until it barely slipped into the green. Google's shot up, while Meta's plunged.

Looking beyond the usual numbers, investors were largely focused on cloud revenue growth and capital expenditures for Amazon and Microsoft. Both figures could give insight into tech's AI journey as capital expenditures showed the money invested into AI infrastructure while cloud revenue reflected signs of returns.

Microsoft's AI spending dipped earlier this year, as the company reported $31.9 billion in capital expenditures for its third quarter, which ended on March 31. It's down from the record high reached the previous quarter, but is still significantly higher than in previous years.

All told, Microsoft has disclosed $104.3 billion in capital expenditures from last June through March. On a Wednesday earnings call with analysts, Microsoft chief financial officer Amy Hood said the company expects to finish off the fiscal year with record quarterly spending.

Microsoft's AI investments have shifted more to computer chips, as it races to keep supply up with demand. That will continue during the current quarter, as Hood said capital expenditures are likely to reach over $40 billion, bringing the entire fiscal year's spending to more than $144 billion.

It won't slow down in the latter half of the calendar year. While Microsoft didn't give earlier capital expenditure projections for its current fiscal year, Hood revealed Wednesday that from January through December, Microsoft's AI investments will be roughly $190 billion.

Microsoft's earnings for the quarter offered signals that AI demand is growing. The company reported its Azure revenue growth was up 40% year-over-year and its overall AI business was on track to bring in $37 billion in revenue this fiscal year.

We remain confident in the return on these investments given higher demand signals and increasing product usage," Hood said.

Amazon spent $43.2 billion, mostly related to AI, in the first three months of this year. Amazon CEO Andy Jassy said during an earnings call with analysts that he didn't have a "new update" on capital expenses for the year, telling investors the company would stick to its plan. In February, he said Amazon plans to spend about $200 billion this year, mostly on AI infrastructure.

The company's free cash flow plummeted from $25.9 billion at the end of March 2025 to $1.2 billion at end of this March as it continued to shell out money to fund power, chips, servers and data centers.

Those expenses are meaningful to the company's bottom line, Jassy said, but they'll pay themselves back over time, particularly because the short-term costs will have long-term benefits. The data centers Amazon is investing in today, for example, will be useful for more than two decades, while computer chips will last up to six years.

Amazon also has to make those investments to keep up with demand in the company's cloud computing division, Amazon Web Services, Jassy continued. AWS revenue grew 28% in the first quarter of the year - the largest increase among all of Amazon's business segments - to $37.6 billion. That's the fastest AWS growth rate in 15 quarters and the largest increase from the fourth quarter of one year to the first quarter of the next in AWS history, Jassy said. The AWS backlog totaled $346 billion at the end of the first quarter.

"The faster AWS grows, the more short-term cap ex we will spend," Jassy told analysts. "We've been through this cycle with the first big AWS growth wave and liked the results. We expect to feel similarly about this wave."

On Wednesday, he reassured investors again that the spending would be worth it.

"We do view this as truly a once-in-a-lifetime opportunity," he said, telling investors that every existing application will be rebuilt on top of AI while new applications that are only possible with AI haven't yet been imagined. "I expect we will invest a significant amount of capital over the coming years to pursue that opportunity, and I expect our customers and Amazon in general are going to be much better off down the road because we did so."

Jassy also pointed to Amazon's own computer chips, as he did in a letter earlier this month to shareholders. On Wednesday he said the company's developing chips business "continues to grow rapidly and is larger than what a lot of folks thought.

Amazon recently signed a deal with Meta, in which the former would sell the latter chips.

Outside of AI spending, Amazon's expectations for the next quarter include higher transportation costs related to rising fuel prices amid the Iran war and a $1 billion increase related to its satellite venture as it ramps up production and launch cadence, according to Amazon's Chief Financial Officer Brian Olsavsky.

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This story was originally published April 30, 2026 at 6:38 AM.