Amazon’s New AI Offer Reflects Discounting Surge

Have we gone full circle on AI pricing? A bunch of tech firms are throwing around discounts and free offers for AI products, with Amazon on Wednesday announcing that merchants selling on its shopping site will get a year’s free use of its Quick Plus AI assistant product. Microsoft, meanwhile, is discounting Copilot AI subscriptions heavily, we reported Tuesday night. Both offers are part of a wave of discounting by various software firms and AI labs such as OpenAI.

We keep hearing from tech executives about the transformative nature of AI. And yet there’s clearly some resistance among businesses to paying full price for it, which seems a bit of an issue given how much money it is costing to build out the infrastructure for running AI on a mass scale. Something has to give. As Apollo Global Management’s chief economist, Torsten Slok, noted in his daily email on Monday, credit investors are buying bonds of the hyperscalers—a reference to cloud firms—right now on the assumption that their operating cash flow will triple between 2025 and 2030. “If this doesn’t happen, then the risk is that the AI trade weakens, with credit spreads widening, capex plans getting cut,” Slok wrote.