The news: Amazon’s annual revenues surpassed $700 billion for the first time, a milestone that reinforces the company’s ecommerce and cloud dominance.
However, Amazon’s AI investments are taking precedence as the retailer looks for ways to maintain its grip on online sales and protect its main profit engines. The company expects to spend a whopping $200 billion on capital expenditures this year, considerably more than last year’s $125 billion, as it beefs up AWS’ AI capabilities and invests in automation to lower the cost to serve.
Those investments are already weighing heavily on Amazon’s bottom line, with the company falling short of profit expectations in Q4.
What Amazon is doing: To offset the considerable expense of its AI expansion, Amazon is cutting where it can.
The company also plans to use AI to speed up TV and film production at Amazon MGM Studios, with the explicit aim of reducing the costs associated with content production, the division’s COO, Albert Cheng, told Reuters.
Zoom out: Amazon’s drive for efficiency extends to its retail business, where it is constantly looking for ways to get orders to customers faster without driving up the cost of fulfillment. The retailer’s persistent tinkering paid off in 2025: Delivery speeds were their fastest yet for the third year in a row), with the number of items received via same- or next-day by US Prime members increasing by 30% YoY to 8 billion.
The push for faster delivery goes hand-in-hand with Amazon’s overhauled grocery strategy, which prioritizes ecommerce. Groceries and everyday essentials accounted for half of the items delivered same- or next-day to Prime members, an encouraging sign for the retailer as it expands grocery delivery access to thousands of locations nationwide. However, even with those investments, we expect Amazon’s share of online grocery sales to fall slightly this year to 23.3%, showing that it will need to do more to keep pace with Walmart.