Amazon's AI spending spree in focus ahead of earnings

Capital Expenditures and Investment - Amazon is on track to invest over $100 billion in capital expenditures this year, marking its most investment-heavy year ever [1] - The increased capital expenditure is part of a hyperscaler arms race, with Microsoft exceeding $100 billion and Alphabet boosting its spend to $85 billion [2] AWS Performance and Strategy - Approximately three-quarters of Amazon's capital expenditure is allocated to AWS infrastructure, including in-house chips and data center buildout [3] - AWS remains Amazon's profit juggernaut, contributing over 60% of operating income last quarter with margins triple the company average [3] - AWS's revenue is expected to increase by about 17% in Q2, which is slower than Google Cloud's 32% growth [4] - The industry is watching to see if AWS can reaccelerate and capture the next wave of cloud spending as generative AI workloads increase [5] Competitive Landscape - Microsoft disclosed $75 billion in Azure revenue for fiscal 2025, a 34% year-over-year increase, pushing its market value past $4 trillion [4] - The industry is closely monitoring Amazon's partnership with Anthropic to see if it begins to yield positive results [5]