In a recent interview with CNBC's Jim Cramer, Amazon CEO Andy Jassy explained why Amazon is making significant capital expenditure investments in AI infrastructure: You have to bet big when you find major inflection points.

"When you have shifts that are this momentous, you want to make sure that you invest in such a way that you can pursue the opportunity as broadly for your customers as possible," Jassy said. "Not just our customers will benefit, but our shareholders and the company as a whole will be a very different company five to 10 years from now because we're betting big like this than it would otherwise be if we were conservative."

Jassy pointed to Amazon's experience with AWS.

"People sometimes forget the way the cash cycle works in a business like AWS," Jassy said. "So the way it works is that we have to lay out capital and cash in advance of when we can monetize it. This is for land for the data centers, power, the buildings themselves, the hardware, the chips, networking gear. You have to lay all that out in advance. Some of it is about six months in advance and a bunch of it is two years in advance."

He said the payoff comes over time.

"These assets are many-year useful-life assets. On the networking and the hardware side, it's about six years. On the data center side, it's 30-plus-year useful-life assets," he said. "And so you get to monetize those assets over a long period of time so that when your revenue growth starts to catch up with the capital expenditure growth, you actually end up really liking the operating margin and the free cash flow and the ROIC."

Jassy said Amazon has been through this before in the first wave of AWS, “where we had the same type of curve where we were spending so much CapEx in the short term, and then we all really liked the free cash flow and the ROIC a few years later.

"And I think the same story is going to play out, except with just much larger revenue and free cash flow downstream," Jassy said.