Sherwood News

Amazon is spending billions to make sure it doesn’t fall behind in AI

The company’s $75 billion capital splurge shows no signs of slowing in 2025.

11/25/24 10:29AM

With Microsoft tightly intertwined with OpenAI, and Apple, Google, and Meta stuffing their own versions of AI into pretty much all their products, Big Tech is hard at work capturing as much value — or garnering as much hype — from AI as possible. Amazon’s latest move is a $4 billion bet on Anthropic, announcing the investment in the AI startup on Friday, doubling its total stake in OpenAI’s largest rival to $8 billion. (See here for a great explainer of the web of investments in AI companies.)

Amazon’s deal will see Anthropic use AWS chips for its foundational models, and it follows Anthropic’s June release of the latest version of its AI assistant, Claude. The company says Claude outperforms OpenAI’s GPT-4o and Google’s Gemini 1.5 Pro across a range of tasks: writing, coding, solving math problems, interpreting charts, transcribing text from images, and, apparently, understanding humor.

Of capital importance

The investment is a continuation of Amazon’s (and the rest of Big Tech’s) new strategy: spend billions of dollars to make sure you don’t fall behind in AI. That doesn’t just mean passive investments in startups. Indeed, for years, Big Tech was the epitome of the capital-light business model, driving profits from intangible assets like software. Now, the tech giants are pouring billions into physical stuff, including massive data centers and custom chips.

The four tech giants — Amazon, Microsoft, Meta, and Alphabet — spent nearly a combined $60 billion on capital investments in Q3, up 59% from last year. By the end of 2024, this figure is expected to surpass a total of $200 billion, with Amazon leading at $75 billion — most of which supports AWS and its AI business. AWS, while accounting for just 16% of Amazon’s revenue in 2023, generated two-thirds of the company’s operating profit.

Amazon’s spending spree shows no signs of slowing, with the company expecting to splurge even more in 2025. In the latest earnings call, CEO Andy Jassy called the company’s relentless spending a “once-in-a-lifetime type of opportunity.”

Rani Molla15h

Amazon raises the price for ad-free Prime Video to $4.99

Amazon is giving consumers more — for more. The e-commerce giant is raising the price of its ad-free Prime Video tier to $4.99 a month, up from $2.99.

On April 10, the service, now rebranded as Prime Video Ultra, will allow more concurrent streams (five instead of three) and up to 100 downloads, up from 25. Ad-free Prime Video had been included with a Prime membership until 2024, when Amazon added ads and began charging $2.99 a month to remove them.

For what it’s worth, ad-free Prime Video is still cheaper than the other increasingly expensive streaming services — if you don’t include the cost of Prime.

Prime Video’s Ad Free subscription becomes Prime Video Ultra for $4.99 a month

For what it’s worth, ad-free Prime Video is still cheaper than the other increasingly expensive streaming services — if you don’t include the cost of Prime.

Jon Keegan

17h

Most Americans have heard about data centers — the more they learn, the more negative their views

A major survey by Pew gives us a good look at how Americans are thinking about data centers as they start popping up in communities across the US.

Rani Molla18h

Uber relaunches robotaxi service with Hyundai-backed Motional in Las Vegas

What happens in Vegas, keeps happening in Vegas.

Uber users in Las Vegas can now be matched with an electric Motional IONIQ 5 robotaxi along parts of the Strip and at select casinos, resorts, and the Town Square shopping district near the airport, the companies said. For now, each vehicle includes a human safety operator monitoring from behind the wheel, who the companies say will be removed by year’s end.

Uber and Hyundai-backed autonomous tech company Motional previously tested a service there in 2022. “Motional is ready to put our extensive ride hail experience to work with Uber again,” said David Carroll, vice president of commercialization at Motional, which paused its commercial deployments in 2024 to refocus on its core driverless technology after scaling back operations.

This time around, the companies will be joining a much more crowded field. Amazon-owned Zoox has been offering free rides along select destinations on the Strip since last year, and both Tesla’s Robotaxi and Alphabet-owned Waymo have plans to open up shop there in the near future.

Thanks to a spate of recent AV partnerships, Uber, which sold its own autonomous unit back in 2020, is finding itself at the center of the nascent robotaxi boom.

Rani Molla19h

Musk says “xAI was not built right” amid executive departures, Cursor hires

There’s been a lot of turnover lately at xAI, with numerous executive departures and, yesterday, news that the SpaceX-owned company was hiring two senior leaders from Cursor, an AI coding startup that’s raising funds at a $50 billion valuation.

The reason? “xAI was not built right first time around, so is being rebuilt from the foundations up,” CEO Elon Musk posted on xAI-owned X yesterday, in response to a post about the Cursor hires. Earlier this month, Musk told a conference audience, “Grok is currently behind on coding.”

The news amounts to an admission of a reset inside xAI and an acknowledgment that the company is trailing AI peers like Anthropic and OpenAI in one of AI’s most commercially important applications: coding.

xAI was not built right first time around, so is being rebuilt from the foundations up.

Same thing happened with Tesla.
— Elon Musk (@elonmusk) March 12, 2026

Jon Keegan20h

War in the Middle East halts Meta’s undersea fiber project

Meta’s massive undersea cable project connecting Africa and the Middle East to Europe has run into an unexpected obstacle — not under the sea, but in the sky and land above: the war in the Middle East.

According to a report from Bloomberg, France’s Alcatel Submarine Networks, the company that is laying the cable, notified customers that it can no longer safely operate in the area.

The 2Africa project consists of a 45,000-kilometer chain of undersea fiber-optic cables that encircles Africa and runs through the Red Sea, up through the Gulf of Oman, where the Strait of Hormuz sits. Iran has declared the strait — a crucial choke point for oil and natural gas tankers — closed for traffic.

Meta is building the network in partnership with Bayobab, China Mobile, Orange, Telecom Egypt, Vodafone, WIOCC, and Center3.

Big Tech’s most important infrastructure is at the bottom of the sea