On Thursday, Amazon is expected to join major tech names such as Google and Microsoft in reporting a capital spending surge on artificial intelligence (AI).
Their commitment to increasing expenditures for technology is an attempt to capitalize on the boom of AI.
Based on LSEG data, its capital investment is expected to rise by 43.00% to $16.41 billion in the second quarter, which equates to a $1.50 billion jump from the last three months.
However, the steep expenses may weigh on the e-commerce giant’s margins. It could offset benefits from cost-cutting and supply chain improvements that support its unit’s profitability.
Amazon Web Services business reigned in the cloud computing market but competed with Microsoft. This came after it launched AI-powered services to its Azure cloud sector.
On the other hand, the Windows maker and Alphabet announced that they would continue investing despite the AI payoff taking longer than hoped. As a result, it knocked major tech stocks whose valuations spiked this year on the AI outlook.
According to analysts, Amazon’s spending will be closely observed as it has slowly adopted AI. Also, it shifted towards smaller entities that were challenged in the high-interest environment.
They added that they foresee the company’s web services to speed up its AI development as it progresses.
AI Upgrade to Rollout on Amazon Checkout Technology
On Wednesday, Amazon announced that it integrated an advanced AI model into its Just Walk Out checkout technology. It aims to make the system more efficient and faster in giving customer receipts at a low implementation cost.
The updates use the same machine learning models most generative AI applications utilize.
Its new checkout upgrade would analyze all inputs simultaneously to determine what customers pick up, put down, and walk out with.
In addition, Amazon will release an RFID-powered checkout system. The system would be used in stores where shoppers frequently browse without checking in at a payment station before entering.
