Amazon To Invest $200 Billion In AI After Washington Post Announces Layoffs

Amazon will spend $200 billion in 2026, over 50 per cent higher than last year, ramping up investment in artificial intelligence and robotics, the tech giant said. 

The announcement came a day after The Washington Post, owned by Amazon founder Jeff Bezos, said it would cut around one-third of its employees.

CEO Andy Jassy, in a statement, said that the spending will go towards building AI infrastructure, custom chips, robotics, and low-earth orbit satellites as it competes with rivals in the fast-growing AI space. "Amazon will increase capital spending to $200bn this year from $125bn," he said.

The company also reported $213 billion in revenue, but its fourth-quarter earnings, despite strong sales growth, fell slightly short of Wall Street expectations.

Amazon is planning to spend most of the $200 billion into Amazon Web Services (AWS), which runs cloud services for companies, governments and apps, where the biggest chunk of money will be used to run and support AI work.

"I think this is an extraordinarily unusual opportunity to forever change the size of AWS and Amazon as a whole," Jassy said, adding, "We see this as an unusual opportunity and we're going to invest aggressively to be the leader."

Amazon warned that its huge spending plans will hurt profits in the short term. For the current quarter, the company said it expects income to be between $16.5 billion and $21.5 billion. However, analysts were expecting about $22.2 billion on average.

As a result, Amazon's shares fell around 10 per cent after markets closed, even though the stock had already dropped 3.5 per cent earlier this year before Thursday's results. The share price closed at $222.69 in New York before the drop.

On the positive side, AWS performed very strongly as its revenue jumped 24 per cent to $35.6 billion, which Amazon said is its fastest quarterly growth in over three years. The cloud business also made $12.5 billion in operating income.

The Washington Post has cut about 30 per cent of its total workforce, affecting more than 300 journalists. 

Matt Murray, the Washington Post's executive editor, told employees in a call on Wednesday morning that the paper was losing money for a long time and failing to connect with readers. Because of these losses, he said the cuts were unavoidable, according to The NY Times.

Murray also said the Post would now concentrate more on national news and politics, along with business and health coverage, while reducing reporting in other areas such as sports and books.

The Washington Post's sports section and books section will shut down completely, and it will also end its daily news podcast, "Post Reports." International coverage will also be cut back, with journalists in the Middle East, India and Australia being laid off.