1 Update Amazon CEO Andy Jassy Just Said That Every Artificial Intelligence (AI) Investor Should Hear
Key Points
AWS growth is accelerating, even though it's already the largest cloud company in the world.
The market is starting to appreciate the need for high spend in AI.
Small companies that provide supplies for the AI business are growing rapidly.
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Amazon (NASDAQ: AMZN) just gave investors the fantastic update they've been waiting for, and the market finally gave it some love.
The update, which included a 17% year-over-year increase in sales and a 30% increase in operating income, was certainly a boon for Amazon stock, which jumped after the report. But there was important news in there that every artificial intelligence (AI) investor should pay attention to.
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AWS, AI, and capex
Amazon stunned the markets a few months ago when it laid out its planned 2026 capital expenditure (capex) for 2026 at $200 billion. That's more than most companies even generate in revenue in one year. CEO Andy Jassy tried to appeal to investors' logic, explaining why the investment was essential to set the groundwork for the next phase of AI expansion. The market wasn't exactly thrilled at the time, but it's been coming around as the company monetizes its spend, and there's been more and more progress in useful AI.
Image source: Amazon.
Amazon Web Services (AWS), the company's cloud business, is still the largest cloud company in the world. Growth continues to accelerate, up 28% year over year in the first quarter. That's especially significant because it's already so big, and the implication is that AI is doing a lot of the heavy lifting. Developers engage with AI through AWS and its many features and services, including its signature Bedrock platform. There were many positive updates specifically about the AI business in the first quarter. Amazon added or expanded deals with OpenAI, Anthropic, Meta Platforms, Nvidia, and Uber in the quarter, in addition to many more clients.
To meet soaring demand, Amazon is spending at a high rate. This is what Jassy said: "AWS is to lay out cash for land, power, buildings, chips, servers, and networking gear in advance of when we can monetize it, typically six to 24 months before we start billing customers, depending on the component."
While companies like Amazon and Nvidia still have a long growth runway, many investors are seeing the potential of investing in the companies on the receiving end of hyperscaler spending that provide the land, power, buildings, and more. They may have even more long-term potential because they're small outfits today. While some of the suppliers, like Nvdia and Broadcom, are already AI powerhouses, companies like Bloom Energy, X-Energy, and Sandisk provide the essential components for AI hyperscalers to develop their platforms.
Consider how Sandisk, Bloom Energy, and others, like Lumentum, CoreWeave, and Applied Digital, have soared over the past year:
BE data by YCharts
Their growth is far from over, as Amazon and its peers continue to invest.
This is great news for AI investors, and if you haven't jumped on the bandwagon yet, there's still time. You don't need to view AI stocks as risky plays; you can invest in solid and stable companies like Amazon and still benefit from AI's skyrocketing growth.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Bloom Energy, Broadcom, Lumentum, Meta Platforms, Nvidia, and Uber Technologies. The Motley Fool has a disclosure policy.
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