By Key Points
Amazon CEO Andy Jassy recently acknowledged the company’s capital expenditures budget is rising due to surging memory chip prices.
Micron is only one of three manufacturers that supply advanced DRAM and high-bandwidth memory.
Jassy says shortages could last until 2028, signaling robust demand for AI memory during the next couple of years.
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The world’s largest technology companies are pouring unprecedented amounts of money into infrastructure as the artificial intelligence (AI) revolution shows no signs of slowing. Alphabet, Microsoft, Amazon (NASDAQ: AMZN), Meta Platforms, and Oracle are expected to make more than $700 billion in capital expenditures (capex) in 2026 alone.
What once looked like a temporary surge in spending has become a multiyear race to procure land, chips, and the components that power AI servers. As each quarter passes, capex numbers rise. The latest explanation from Amazon Chief Executive Officer Andy Jassy points to one overlooked bottleneck: memory.
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Amazon CEO Andy Jassy. Image source: Amazon.
Breaking down Amazon’s AI capex budget
The trajectory of Amazon’s infrastructure spending illustrates a broader pattern. In 2025, the company spent roughly $132 billion on capital projects. For 2026, Amazon raised its capex forecast from about $200 billion to $220 billion.
The bulk of this money flows through Amazon Web Services (AWS), which continues to expand as enterprises and developers demand more cloud capacity. Data center construction remains a major source of spending — requiring new buildings, power infrastructure, and cooling systems across multiple continents.
Alongside physical facilities, Amazon is investing heavily in custom silicon designed to reduce reliance on external suppliers. Moreover, the company’s satellite constellation, Project Kuiper, and its robotics and automation efforts in fulfillment centers also comprise meaningful allocations of the AI budget.
Taken together, these initiatives are changing what was once a cloud and retail spending plan into a more comprehensive industrial build-out aimed at capturing the next decade of digital and physical growth.
Don’t ignore Jassy’s remarks about AI memory
Jassy explained the increase in capex on the company’s second-quarterearnings call saying:
We now believe we will spend approximately $220 billion in cash capex in 2026. The higher cost of memory is pushing this number up from our prior estimate of about $200 billion. Even at that amount, we will not have enough capacity to meet all the demand we have in 2026, and I believe this dynamic will also be true in 2027. In fact, the demand we already have for 2028 is striking.
These comments are important because Jassy deliberately isolates memory pricing as a critical, multibillion-dollar cost driver rather than a secondary detail. High bandwidth memory (HBM) and advanced DRAM have become essential for training large language models and deploying inference at scale, as each new generation of AI accelerators consumes more of both.
When a hyperscaler of Amazon’s caliber is forced to revise its capex budget higher because of memory costs, it confirms that demand for these specialized chips is outstripping supply by a wide margin. The implications for the broader AI memory market are straightforward: Pricing power remains with producers, and the memory supply shortage is expected to persist for at least another year, if not longer.
Why should Micron investors pay attention to Amazon?
Jassy’s remarks serve as a high-visibility confirmation of multiyear strength in demand for DRAM and HBM suppliers. Micron Technology (NASDAQ: MU) is one of the few producers capable of supplying these chips at scale.
When the largest cloud services provider says that rising prices for memory added billions to its AI budget, it signals that customers are willing to pay more to secure scarce supply. These dynamics support higher average selling prices, widening gross margins, and stronger free cash flow for memory manufacturers such as Micron.
Smart investors understand that the same capacity constraints that are forcing Amazon to spend more also support the view that Micron’s order book should remain robust well beyond the current year. Against this backdrop, Micron’s growth prospects rest on secular rather than cyclical demand.
The combination of rising hyperscaler spending, memory chip shortages, and a multiyear demand cycle creates a clear runway that the memory sector has rarely enjoyed in prior boom-and-bust cycles.
For investors prepared to weather short-term volatility, the latest outlook from Amazon strengthens the case that Micron’s business remains positioned to capitalize as the AI infrastructure boom accelerates. For this reason, Micron stock could serve as a complement to a buy-and-hold strategy alongside other chip stocks in an AI-themed portfolio.
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Adam Spatacco has positions in Alphabet, Amazon, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Micron Technology, Microsoft, and Oracle. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.