Andy Jassy said Amazon's massive spending on artificial intelligence isn't something investors should fear — it's exactly why they'll be rewarded over time.

"We believe that AI is the biggest technology transformation in our lifetimes," the CEO said on "Mad Money." "It's going to reinvent every single customer experience we know and altogether new ones we never imagined."

In February, Amazon announced plans to invest $200 billion this year in capital expenditures, largely tied to AI infrastructure. The disclosure alongside fourth-quarter earnings sent shares tumbling. It took roughly two months for the stock to erase all of its post-earnings declines in early April. It has kept climbing higher since then, setting a new record close Monday.

The crux of the debate surrounding the stock: Will Amazon be able to generate meaningful returns from all this spending? Skeptics also note that Amazon is projected to have negative free cash flow in 2026, according to FactSet.

Jassy argues that scale of spending reflects just how big the opportunity is. He pointed to the sheer pace of growth of its cloud unit, Amazon Web Services, as evidence that the company is investing in the right place.

"After the first three years of this incarnation of AI, our run rate is over $15 billion — 260 times what it was the first three years of AWS," he said. AWS is expected to generate total revenue of roughly $166 billion this year, according to FactSet.

"When you have shifts that are this momentous … you want to bet big," added Jassy, who used to lead Amazon's cloud unit before replacing Jeff Bezos as companywide CEO in 2021.

Jassy specifically pushed back on the cash flow concerns, saying critics misunderstand how Amazon makes money from these investments. "We have to lay out capital and cash in advance of when we can monetize it," he said, explaining that investments in data centers and infrastructure are made years before they generate revenue.

Those assets, however, have multiyear long lifespans, Jassy said, allowing Amazon to generate returns over an extended period.

"When your revenue growth starts to catch up with the capital expenditure growth, you actually end up really liking the operating margin, the free cash flow, and the [return on invested capital],'' Jassy said. "We've lived this movie once before in the first wave of AWS … and I think the same story is going to play out, except with much larger revenue and free cash flow downstream."