Amazon is the latest US tech giant to announce a huge increase in spending on artificial intelligence (AI) and infrastructure.

Reporting its annual results on Thursday, Amazon said it will put $200bn (£147.7bn) this year into building out its business, with much of it going on AI.

It is a big increase from last year, when it spent $125bn. But the announcement did not appear to be welcomed by investors as its shares fell by more than 11% in after hours trading.

Over the past week it emerged Amazon, Meta, Google, and Microsoft are collectively planning to plough $650bn into AI and related projects this year, with Amazon's plans making it the most aggressive investor in AI among the Big Tech companies.

The scale of AI investment announced by the firms is the equivalent of more than double the economic output of Peru.

Amazon said it will invest in "AI, chips, robotics, and low earth orbit satellites," but chief executive Andy Jassy was clear on a call with financial analysts that the bulk of its spending will go towards AI.

"It's an unusual opportunity," Jassy said of AI, suggesting it will become profitable in the future. "I passionately believe every customer experience we have today will be reinvented by AI."

"We're going to invest aggressively," Jassy added.

Amazon's plans come as fears of a bubble in the AI market grow. The Bank of England in December warned major tech firms could face a "sharp correction" in their valuations, saying share prices in the US are reminiscent of those before the dotcom bubble burst.

Meanwhile, in an interview with the BBC, the boss of US tech giant Cisco said the transition to AI will create winners, but warned there will be "carnage along the way".

Chuck Robbins said the technology will be "bigger than the internet", but the current market is probably a bubble and some companies "won't make it". And JPMorgan Chase boss Jamie Dimon said some of the money invested in AI would "probably be lost".

Leaders of other companies joining the AI rush have struck a similar tone.

Meta boss Mark Zuckerberg said in January the company will spend up to $135bn this year, nearly double the amount it did a year ago.

The Facebook, Instagram and WhatsApp owner is working on training its AI models, building out data centres and buying the computer chips that are required to operate AI tools. But Zuckerberg also pointed to the use of AI by technical workers, saying that fewer people are now needed on big projects.

Zuckerberg predicted "2026 to be the year that AI dramatically changes the way we work."

Google chief executive Sundar Pichai said his firm will invest even more than Meta on AI, more than doubling its capital expenditure to $185bn this year. The company is expanding its technical infrastructure related to AI, including servers and data centres.

While Microsoft did not say exactly how much it will spend over the year, it has so far spent over $72bn on recruiting talent and infrastructure related to AI, while executives have made no mention of pulling back spending.

The latest round of investment plans comes as investors are increasingly looking for certainty about the earning potential of ever-more costly AI-related projects.

Shares of Meta, Microsoft, Google and Amazon have fallen in recent days, despite increasing revenues and profits.

The S&P 500 stock index, which includes all of those companies and many more in the broader technology sector, fell by more than 1% on Thursday, adding to a week of losses from an all-time high reached at the end of January.

Mary Therese Barton, chief investment officer at Pictet Asset Management, told the BBC there were "certainly jitters", comparing the drop in share prices to the rout caused by the advent of Chinese AI firm DeepSeek a year ago.

She said: "It has definitely been a bit of a rupture and a bit of a wake up call as well, in terms of: 'Are these investments in AI going to come good?'.

"It's an environment where valuations have been tight, there was almost indiscriminate optimism, so now there is a real sense of trying to get under the hood, who the winners are going to be, who the losers are going to be, what it is going to mean for different sectors."