Amazon Leverages New Tax Laws to Fuel AI Buildout

Core Insights - New tax laws significantly reduced Amazon's U.S. corporate income taxes by more than half in 2025, despite a rise in profits [1][2] - Amazon's U.S. taxes decreased from $9 billion to $1.2 billion, with federal income taxes on a cash basis dropping from $7 billion to $2.8 billion, while pretax U.S. profit increased by 44.5% to $89.5 billion [2] Tax Law Changes - The tax cuts are attributed to two changes in tax law signed by President Trump, allowing immediate deductions for certain capital investments and new domestic research [3] - Much of the equipment used in Amazon's data centers qualifies for these immediate deductions [4] Amazon's Investment and Tax Strategy - Amazon reported spending $340 billion on operating costs and capital investments in U.S. data centers in 2025 [4] - The company stated that the tax code changes encourage greater investment in the American economy, reflecting its significant U.S. investments [5] Broader Industry Context - The White House's legislation aims to incentivize domestic manufacturing with full 100% expensing for new factories and equipment [6] - AI-related infrastructure spending by Big Tech is projected to exceed $2.8 trillion through 2029, driven by early investments and rising demand for enterprise AI [6] - Citigroup forecasts capital expenditures among hyperscalers to reach $490 billion by the end of 2026 [7]