Amazon, the company that has become a $2 trillion giant through years of aggressive investments in its retail and logistics business, is now setting its sights on the future. The upcoming profits will be significantly influenced by the billions allocated for its push into the field of artificial intelligence (AI).

Amazon plans to invest more than $100 billion in data centers over the next ten years, an impressive sum even for a company known for its high spending. The focus of the investments is thus shifting from the e-commerce network to cloud computing and AI infrastructure.

Amazon Web Services (AWS), the division that manages Amazon's cloud business, has been building data centers for years. However, current investments are set to be significantly increased to meet the demand driven by the enthusiasm for AI. "We have to engage with it and figure it out," said John Felton, who took on the role of Chief Financial Officer at AWS this year after previously working mainly in Amazon's retail sector.

This financial commitment reflects the importance and high costs of AI. Felton compared the current building of AI infrastructure to the construction of the massive delivery network in the past. AWS is currently expanding in Virginia, Ohio, and other regions.

Amazon's total investments in fixed assets declined mainly last year due to reduced spending on warehouse and transportation infrastructure. However, the share of spending on infrastructure, primarily for AWS, increased significantly. This marks a new era of expansion for Amazon, where investments in cutting-edge cloud technology are more crucial for growth than the development of its retail network.

In 2023, expenditures for data centers, including leasing, reached a ten-year high at 53% of total capital spending, according to market research firm Dell’Oro Group. Amazon expects that investments in AWS infrastructure will remain high this year and has announced numerous investments in AWS in recent months.

Amazon's cloud business has long been the profit engine of the company, and expectations for AI will drive the demand for cloud computing to new heights. Amazon executives aim to capitalize on the AI boom, which relies on cloud services due to the intensive computing resources required. Amazon expects billions in revenue from AI business in the coming years.

We are currently focusing on providing these capacities," said Kevin Miller, Vice President of Global Data Centers at AWS.

This shift in focus highlights the changing needs of a company that, despite its leading position in cloud computing and years of experimentation with AI, is seen by some experts as lagging behind its major tech competitors. However, Amazon has emphasized that it is not falling behind in AI and that AWS's AI capabilities are well-received by customers.

Amazon has a long history of significant investments to stay ahead. Years of intensive capital investments in delivery infrastructure helped the company dominate e-commerce and manage the enormous demand during the COVID-19 pandemic.

These massive investments helped Amazon become the fifth U.S. company ever to reach a market value of $2 trillion last week. The stock closed at $193.25 on Friday, equating to a valuation of $2.011 trillion.

The increased focus on data centers is also evident in Amazon's leadership team, which is increasingly populated by individuals with connections to the cloud business. Andy Jassy, who served as CEO of AWS for over two decades, assumed the role of CEO of Amazon in 2021.

There is a natural tendency to invest more in AWS and technology because those are the areas that the executives have developed," said Cayce Roy, CEO of the e-commerce fulfillment company Standvast and former Vice President at Amazon.

Amazon plans to build at least 216 new data center buildings in the coming years, said Marc Wulfraat, president of logistics consultancy MWPVL International. Investments in retail are not expected to grow significantly until 2025, partly because Amazon has overcapacity in this area following the pandemic-related overexpansion.

With the high demand for AI infrastructure, Amazon and other tech companies are struggling to procure the necessary parts, land, and energy for data centers with supercomputers. Amazon and other major tech companies have even explored nuclear power to meet their energy needs. Building the fulfillment network took many years and did not require the same technical equipment as data centers.

Jassy has realigned Amazon to focus on AI products across all business areas. He has said that generative AI could be a crucial element for the next growth pillar, in addition to the online retail business, Amazon Prime, and AWS.

In May, the company appointed Matt Garman, an experienced manager with a strong technical background, as the new CEO of AWS to better leverage opportunities in the field of AI.

Amazon remains the largest online retailer in the US, and recent financial reports show that the company is in a stronger position than ever before. Amazon continues to invest in its retail sector and is opening new delivery centers. It has expanded its shipping capacities to reach more Americans faster as it competes with new e-commerce entrants.

But now is also the time to invest in the AI opportunity, said Felton.

It is a fascinating time to be here and to think about how we can truly think differently about how cloud computing works and how we can serve customers differently in the world of generative AI," he said.