Andy Jassy Sees Very ‘Unusual’ Opportunity

On Thursday, Amazon.com, Inc. (NASDAQ:AMZN) pushed back against Wall Street’s growing skepticism over soaring AI-related capital expenditures.

During the company’s fourth-quarter earnings call, Amazon addressed investor concerns around its aggressive spending on AI and data center infrastructure, arguing the investments are already producing returns.

Responding to questions from Evercore ISI analyst Mark Mahaney about long-term return on invested capital, CFO Brian Olsavsky said Amazon is seeing immediate utilization of the capacity it is bringing online, particularly within Amazon Web Services.

Don’t Miss:

“We are putting into service with customers all capacity that we are getting and it’s immediately useful,” Olsavsky said, adding that strong backlog and long-term customer commitments, especially for AI services, reinforce the company’s confidence.

Olsavsky highlighted that AWS’s profitability remains resilient even as Amazon ramps up spending.

AWS posted a 35% operating margin in the fourth quarter, up 40 basis points year over year, despite what he described as near-term headwinds from AI-related depreciation.

Margins will “fluctuate over time,” he said, noting that Amazon continues to offset AI-related costs through operational efficiencies and cost reductions.

Trending: It’s no wonder Jeff Bezos holds over $250 million in art — this alternative asset has outpaced the S&P 500 since 1995, delivering an average annual return of 11.4%. Here’s how everyday investors are getting started.

Most of Amazon’s capital expenditures this year are expected to go toward AWS, with the majority tied directly to AI infrastructure. Some spending is also supporting faster-than-expected growth in non-AI workloads.

Amazon CEO Andy Jassy underscored the scale of the opportunity, pointing to AWS’ 24% year-over-year growth and an annualized revenue run rate of $142 billion.

“What we are continuing to see is that as fast as we install this capacity, this AI capacity, we are monetizing it. So it’s just a very unusual opportunity,” CEO stated.

He added that AI adoption is accelerating cloud migration, as customers increasingly need both their data and applications in the cloud to deploy AI at scale.

Jassy said Amazon’s experience building and scaling AWS — including designing its own chips and networking gear — gives the company an advantage as AI workloads mature.

See Also: From Moxy Hotels to $12B in Real Estate — The Firm Behind NYC’s Trendiest Properties Is Letting Individual Investors In.

Over time, he expects AI economics to improve as inference workloads scale, utilization rises and pricing normalizes.

“This isn’t some sort of quixotic top-line grab,” Jassy stated. ” I’m very confident we’re gonna have strong return on invested capital here.”

Amazon reported fourth-quarter net sales of $213.39 billion, marking a 14% increase from a year earlier and topping Wall Street expectations of $211.30 billion, according to Benzinga Pro.

Pointing to robust demand across its core businesses and emerging areas such as AI, custom chips, robotics and low Earth orbit satellites, Jassy said the company plans to spend roughly $200 billion on capital expenditures in 2026.

Read Next: Americans With a Financial Plan Can 4X Their Wealth — Get Your Personalized Plan from a CFP Pro

Photo Courtesy: bluestork on Shutterstock.com

Up Next: Transform your trading with Benzinga Edge’s one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today’s competitive market.

Get the latest stock analysis from Benzinga:

This article Amazon Defends Massive AI Spending, Says New AWS Capacity Being Monetized Quickly: Andy Jassy Sees Very ‘Unusual’ Opportunity originally appeared on Benzinga.com