Amazon CEO Andy Jassy told investors during the post-earnings call that the company expects strong long-term returns on its investments.
Amazon reported a 14% jump in sales in the fourth quarter, driven by strong holiday demand and better-than-expected growth in its key cloud computing business. Despite the solid performance, the company’s fourth-quarter profit came in slightly below analyst estimates.
Amazon shares fell 11% in after-hours trading on Thursday. Investors appeared concerned about the company’s plan to sharply increase capital spending. Amazon said it expects to raise capital expenditure by nearly 60% to about $200 billion, up from $128 billion last year, as it sees major opportunities in areas such as artificial intelligence, robotics, semiconductors, and satellites.
Wall Street analysts had expected capital spending to rise to around $147 billion this year, according to FactSet.
Reiterating his confidence, Jassy said the company believes these investments will deliver strong returns over the long term.
“We continue to see that as fast as we install this AI capacity, we are monetizing it,” Jassy said. “It’s a very unusual opportunity. I strongly believe that every customer experience we know today will be reinvented.”
The earnings report comes as Amazon cuts about 16,000 corporate jobs in its second round of mass layoffs in three months. In a statement emailed last week, the company said AI was “not the reason behind the vast majority of these reductions.” Instead, the layoffs are focused on removing layers to improve speed and efficiency.
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