(Bloomberg) — Amazon.com Inc. warned buyers that it might face capability constraints in its cloud computing division regardless of plans to take a position some $100 billion this yr, with many of the cash going towards knowledge facilities, homegrown chips and different gear to offer synthetic intelligence companies.
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Chief Govt Officer Andy Jassy, decided for Amazon to grow to be an AI grocery store, is spending massive to retain the corporate’s edge in cloud-computing companies. Nonetheless, he warned development could be “lumpy” and hinted Amazon might face capability points associated to delays in getting {hardware} and never having ample electrical energy.
“It’s true we might be rising quicker had been it not for among the constraints on capability,” Jassy stated on a convention name Thursday after the discharge of fourth-quarter outcomes.
The considerations echo these of rival Microsoft Corp., which final week stated its cloud gross sales development was damage as a result of it didn’t have sufficient knowledge facilities to deal with demand for its AI merchandise.
Jassy stated the provision of chips — from third events and Amazon’s personal chip design unit — and energy capability are limiting the power of Amazon Net Providers to carry new knowledge facilities on-line. These constraints will possible ease within the second half of 2025, he stated.
Amazon spent $26.3 billion in capital expenditures within the final three months of 2024, the overwhelming majority of which went towards AI-related tasks inside AWS. Jassy informed analysts on the decision that the quantity was “fairly consultant” of the speed of outlays the corporate deliberate to make in 2025.
The corporate reported that AWS income jumped 19% to $28.8 billion within the quarter ended Dec. 31. It was the third straight interval of 19% development for the cloud unit. Working earnings generated by the unit was $10.6 billion, exceeding the typical projection of $10.1 billion.
“AWS development didn’t speed up as anticipated and as a substitute matched Q3 ranges, indicating that the corporate is challenged by the identical sorts of capability constraints dealing with rivals Google and Microsoft,” stated Sky Canaves, an analyst at Emarketer.
Jassy’s warning on AWS development constraints overshadowed a reasonably sturdy vacation quarter, suggesting the corporate’s fundamental e-commerce and logistics enterprise is keeping off competitors from Walmart Inc. and low cost upstarts like Temu and Shein.