Amazon has pledged to invest up to $50 billion in AI capabilities for the White House and the Pentagon

Amazon has entered into a sweeping agreement with US authorities to expand its AI capabilities for government use. The technology giant will invest up to $50 billion in the creation of data centers to provide federal agencies with access to a comprehensive set of AI services. Experts call these investments a strategic necessity for Amazon, which has recently been losing ground to competitors.

Amazon's investment involves the commissioning of nearly 1.3 GW of new capacity in data centers for government customers of Amazon Web Services (AWS) cloud service in the United States. Implementation of the project will begin in 2026. As a result, U.S. agencies will have increased access to Amazon's SageMaker AI tool for training AI models, Amazon Bedrock for deploying AI agents, Amazon Nova, the Claude model from AI startup Anthropic, Amazon Trainium AI chips, and Nvidia's AI infrastructure.

All of this will allow the government to leverage tools that Amazon claims help model situations, accelerate global security processing and improve supply chain awareness. The agreement will help defense strategies by processing satellite imagery and sensor data to detect threats and create response plans, the company said.

After news of the contract with the White House, Amazon shares rose more than 1%, according to Yahoo Finance. The trading day in New York on November 24, securities of the cloud giant ended in the plus by 2.5%. The price was unchanged in extended trading.

"While Amazon still leads the cloud market, the company has lost ground in cloud AI computing growth momentum, while Google and Oracle have accelerated. This makes large-scale infrastructure commitments a strategic necessity," Reuters quoted Emarketer analyst Jacob Bourne as saying.

"The U.S. is in an AI arms race with China and will significantly increase computing power to maintain its superiority," said D.A. Davidson analyst Jim Luria.

Until recently, Amazon was perceived as a laggard in the AI race, notes Yahoo Finance. Nevertheless, according to FactSet, Wall Street remains exceptionally optimistic about Amazon's stock: over the past three months, the number of "buy" and "above market" recommendations has increased from 68 to 71 (Buy and Overweight), while the number of "hold" ratings (Hold) has declined. None of the analysts tracked by the service recommend selling the company's stock. The consensus forecast suggests an average target price of $297 per paper, implying a potential upside of about 31%.

Global spending on AI, including the cost of building data centers and generating capacity to meet growing electricity demand, is set to grow from $375 billion in 2025 to more than $3 trillion in 2030, Forbes writes, citing a UBS forecast. As more funding becomes concentrated in AI, investors are increasingly expressing fears that tech company stocks are overvalued and could collapse: according to a November Bank of America survey, 53% of investors believe that AI stocks are in a bubble.

This article was AI-translated and verified by a human editor