Amazon plans to spend $150bn on data centres to meet AI demand
World Past To Over Years, Mitted Two $148bn Around Amazon Data Operate Has Build To The The And Centres Spending
Amazon plans to spend almost $150bn (€139bn) in the coming 15 years on data centres, giving the cloud-computing giant the firepower to handle an expected explosion in demand for artificial intelligence applications and other digital services.
The spending spree is a show of force as the company looks to maintain its grip on the cloud services market, where it holds about twice the share of No. 2 player Microsoft. Sales growth at Amazon Web Services, or AWS, slowed to a record low last year as business customers cut costs and delayed modernisation projects. Now spending is starting to pick up again, and Amazon is keen to secure land and electricity for its power-hungry facilities.
“We’re expanding capacity quite significantly,” said Kevin Miller, an AWS vice president who oversees the company’s data centres. “I think that just gives us the ability to get closer to customers.”
Over the past two years, Amazon has committed to spending $148bn to build and operate data centres around the world. The company plans to expand existing server farm hubs in northern Virginia and Oregon as well as push into new precincts, including Mississippi, Saudi Arabia and Malaysia.
Amazon’s planned outlay on server farms dwarfs the public commitments from Microsoft and Alphabet's Google, though neither company discloses data centre-related spending as consistently as Amazon. Microsoft and Google spokespeople declined to provide comparable figures and added that each company likely includes different costs in their estimates.
Amid broader cost-cutting at Amazon, AWS’s capital expenditures on data centers shrank 2% in 2023—for the first time—even as Microsoft boosted its own spending by more than 50%, according to the research firm Dell’Oro. But Amazon’s chief financial officer said last month that capital expenditures would increase this year to support AWS growth, including AI-related projects.
Much of Amazon’s data centre expansion is geared toward meeting a rise in demand for corporate services like file storage and databases. But the facilities, along with advanced and expensive chips, will also provide the massive computing power required for an expected boom in generative artificial intelligence.
Microsoft, close partner OpenAI and Google are widely seen as leaders in commercialising software capable of generating text and insights. But Amazon is building its own tools to rival OpenAI’s ChatGPT and has partnered with other companies to power AI services with its servers. As a result, Amazon expects to reap tens of billions of dollars in AI-related revenue.