Amazon Web Services reported a significant increase in revenue, achieving a growth rate of 24% to reach $35.6 billion in the fourth quarter, marking its fastest growth in over three years. This surge is largely attributed to heightened demand for artificial intelligence and advanced silicon technology.
In a notable disclosure, Amazon revealed that its proprietary data center chips, the Trainium and Graviton processors, now have an annual run rate exceeding $10 billion. Despite this revenue growth, CEO Andy Jassy indicated that the company plans to invest a record $200 billion in capital expenditures by 2026, focusing on areas such as AI, robotics, and satellite technology.
Jassy reassured investors during the earnings call that the company is efficiently monetizing its capacity. However, Amazon's free cash flow has dwindled to $11.2 billion, down from $38.2 billion the previous year, as nearly all profits are being reinvested into expanding AI infrastructure. Following the earnings announcement, Amazon's shares dropped by 10% in after-hours trading, as profits per share of $1.95 fell short of market expectations.