Matt Garman, CEO of Amazon.com Inc.‘s (NASDAQ:AMZN) AWS, said concerns over an AI spending bubble are overstated as businesses report returns from current AI investments.
Garman discussed the outlook on a16z’s podcast with Raghu Raghuram on Thursday, saying Amazon does not rely on one customer for most AWS capacity. “We feel really good about the spend we’re making now,” he said.
He said demand is concentrated in production workloads such as computing, storage and AI inference, which serve as essential services that customers are unlikely to cut back on.
"We take a diversified approach, so not all of our capacity is bundled up in one customer," Garman said, addressing concerns about the company’s AI-related spending.
He added that customers are seeing positive business returns at current AI capabilities and costs and compared the market to venture capital, where failed startups can be offset by successful investments.
“Go talk to customers and ask: at today’s capability and today’s cost, are you seeing positive returns to your business? They’ll say, ‘Yeah.”
Referencing the internet’s history, Garman said an earlier technology bubble produced many failed companies without undermining the internet’s long-term importance. “The internet’s still a thing,” he said.
AWS Cuts AI Costs as Amazon Restructures Chip Financing
Garman’s comments come as AWS highlights efforts to make AI more affordable. Earlier this month, AWS Chief AI and Technology Officer Matt Wood said AI costs could fall substantially, potentially expanding adoption beyond today’s largest customers.
Amazon is reportedly in talks to transfer about $8 billion worth of Nvidia Corp.‘s (NASDAQ:NVDA) Grace Blackwell AI chips to an investor-backed special-purpose vehicle. The vehicle could raise funds through debt issuance, while Amazon would lease the chips back, freeing up capital and shifting assets off its balance sheet.
Amazon CEO Andy Jassy raised the company’s 2026 capital expenditure forecast by $20 billion to $220 billion in July, citing rising memory chip prices and strong demand for AI and AWS infrastructure.
Dalio Warns AI Bubble Risks are Mounting
Billionaire investor Ray Dalio warned that rising AI-related borrowing, higher interest rates and pressure to turn paper wealth into cash could bring the AI bubble closer to bursting.
Calling the boom a "classic bubble," the Bridgewater Associates founder said markets are approaching the stage when mounting debt and borrowing costs could trigger a downturn. He also compared the current AI rally to the late 1920s, noting that major technological innovations often accompany financial bubbles.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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