Amazon's aggressive push into artificial intelligence is transforming both the company's future prospects and Wall Street's perception of the tech giant's position in the AI race.
The company's partnership with AI startup Anthropic has proven particularly fruitful. After investing a total of $8 billion in the Claude chatbot maker, Amazon recently converted a portion of its investment from convertible notes to equity, triggering a $3.3 billion pre-tax gain in Q1 2025. This conversion coincided with Anthropic's March funding round that valued the startup at $61.5 billion, making it one of the most valuable private companies globally.
Amazon CEO Andy Jassy has emphasized the strategic importance of this relationship, telling investors that generative AI represents "the largest technology transformation since the cloud, and perhaps since the internet." The partnership goes beyond investment, with Anthropic using AWS as its primary cloud provider and building its AI models on Amazon's custom Trainium and Inferentia chips.
AWS, Amazon's cloud division, continues to lead the cloud computing market with approximately 30% market share and an annualized run rate of $110 billion. During the company's first-quarter earnings call, Jassy revealed that Amazon's "AI business right now is a multibillion-dollar annual run rate business that's growing triple-digit percentages year over year," adding that "as fast as we actually put the capacity in, it's being consumed."
To meet this surging demand, Amazon plans to invest approximately $100 billion in capital expenditures in 2025, primarily for AI infrastructure. This massive investment—nearly equivalent to AWS's entire 2024 revenue—underscores the company's commitment to maintaining its competitive edge against Microsoft and Google.
Wall Street analysts have taken notice. Mark Mahaney at Evercore and Brian Nowak at Morgan Stanley recently selected Amazon as a top pick, citing its strong AI positioning. Nowak specifically described Amazon as an "underappreciated leader in AI across cloud and retail," noting the company is implementing AI across its business operations to improve efficiency and customer experiences.
Beyond AWS, Amazon is leveraging AI throughout its operations, with Jassy stating the company has built or is building 1,000 different generative AI applications. These include using AI to forecast demand, optimize inventory across fulfillment centers, enhance customer service, and improve advertising targeting.
While Amazon's stock has experienced volatility in early 2025, many analysts remain bullish on its long-term prospects. Wall Street estimates Amazon's earnings will increase at 17% annually through 2026, though the company has consistently outperformed these projections, beating consensus estimates by an average of 29% over the past six quarters.
As AI continues to reshape the technology landscape, Amazon's diversified business model, strategic investments, and aggressive infrastructure buildout position it as a potentially dominant force in the AI revolution for years to come.