Amazon.com Inc (NASDAQ:AMZN) CEO Andy Jassy in his annual letter to shareholders has detailed a corporate strategy centered on high-scale capital investment and technical self-reliance, even as these priorities significantly reduced the company’s short-term free cash flow.
While Amazon's total revenue grew to $717 billion in 2025, free cash flow fell from $38 billion to $11 billion due to a $50.7 billion increase in spending on property and equipment.
Jassy confirmed that capital expenditures are projected to reach approximately $200 billion in 2026, primarily to support artificial intelligence infrastructure and the expansion of the company’s logistics and satellite networks.
The CEO dismissed concerns of a potential AI bubble, writing: "I’ve followed the public debate on whether this technology is over-hyped, whether we’re in ‘a bubble,’ and if the margins and ROIC will be appealing. My strong conviction, at least for Amazon, is that the answers are no, no, and yes."
A major focus of the letter involved Amazon’s efforts to internalize technologies currently dominated by external providers such as NVIDIA, Intel, and SpaceX. Jassy’s assessment of the competitive landscape included specific critiques of existing market standards, particularly the high cost of external chips.
"Virtually all AI thus far has been done on NVIDIA chips, but a new shift has started," he wrote, and added that while the company remains a partner to NVIDIA, "customers want better price-performance."
Jassy also claimed that the semiconductor market is repeating a pattern seen with CPUs, where Amazon’s proprietary Graviton chips displaced incumbents. "The same story arc is unfolding in AI," he wrote.
He estimated that by using its own Trainium chips at scale, the company will "save tens of billions of capex dollars per year, and provide several hundred basis points of operating margin advantage versus relying on others’ chips for inference."
Jassy further directed criticism at traditional logistics and telecom providers, stating that "rural customers are often de-prioritized by logistics and telecom providers because remote communities are more expensive to serve."
He described the company’s satellite network, "Amazon Leo," as a challenge to these established industries, including SpaceX’s Starlink, by promising performance he claimed would be "six to eight times better on uplink, and two times better on downlink than what customers have access to now."
Regarding the company's broader operational philosophy, Jassy referenced the band The Beths to explain that "the straight line was a lie" in business.
He maintained that progress often involves circling back to first principles, concluding that "if you want to be finding that next zig, you need to be willing to go back to first principles," even if it means reimagining customer experiences from a "clean sheet of paper."
Shares of Amazon traded up 3.6% at about $229 following the release of Jassy’s letter.