Amazon CEO Andy Jassy believes companies should "aggressively" invest in artificial intelligence now to achieve adequate financial returns in the future. Jassy's annual letter to Amazon shareholders released ThursdayZhong said "a lot of capital" is needed to keep up with the pace of AI innovation and customer demand for AI products. He added that Amazon needs to invest that money now if it hopes to earn a strong return on investment in the coming years.

Previously, Amazon announced during its fourth-quarter earnings call in February that it planned to invest more than $100 billion in capital expenditures in 2025. Jassy said at the time that "the vast majority" of the funding would be used for AWS's AI capabilities.

Jassy wrote in a letter to shareholders: "We have always believed that artificial intelligence is a once-in-a-generation reinvention of everything we know. The demand for it is like we have never seen before, and our active investment now will greatly benefit our customers, shareholders and business."

Jassy said the biggest expenses for AI right now are data centers and chips, but added that over time the cost of that infrastructure will start to decrease.

"At AWS, the faster demand grows, the more data centers, chips, and hardware we need to purchase (and AI chips are much more expensive than CPU chips)," Jassy wrote. “We put this money up front, even though the assets will last for many years.”

Jassy pointed to Amazon's own Trainium2 chips as an example of how the price of AI infrastructure will drop over time. He added that the chips are 30%-40% more cost-effective than commonly used GPU-powered compute instances today. Trainium2 will be released by the end of 2024.

Jassy also said that AI price dynamics will change in the future as AI training costs fall and funds shift toward inference or actual service AI models.

"We urgently need to reduce the cost of inference for our customers," Jassy wrote. "More cost-effective chips will help. And with improvements in model distillation, fast caching, computing infrastructure and model architecture, inference efficiency will also increase significantly in the coming years."

Jassy said in a letter to shareholders that Amazon is currently developing more than 1,000 generative AI applications. He added that Amazon's AI revenue is growing at a "triple-digit" annual rate, with an annual revenue run rate of "billions of dollars."