(Bloomberg) — Amazon.com Inc. warned buyers that it may face capability constraints in its cloud computing division regardless of plans to take a position some $100 billion this yr, with a lot of the cash going towards information facilities, homegrown chips and different gear to supply synthetic intelligence companies.
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Chief Government Officer Andy Jassy, decided for Amazon to turn out to be an AI grocery store, is spending massive to retain the corporate’s edge in cloud-computing companies. Nonetheless, he warned progress could be “lumpy” and hinted Amazon may face capability points associated to delays in getting {hardware} and never having ample electrical energy.
“It’s true we may very well be rising quicker have been it not for a number of the constraints on capability,” Jassy mentioned on a convention name Thursday after the discharge of fourth-quarter outcomes.
The considerations echo these of rival Microsoft Corp., which final week mentioned its cloud gross sales progress was harm as a result of it didn’t have sufficient information facilities to deal with demand for its AI merchandise.
Jassy mentioned the availability of chips — from third events and Amazon’s personal chip design unit — and energy capability are limiting the flexibility of Amazon Net Providers to carry new information facilities on-line. These constraints will seemingly ease within the second half of 2025, he mentioned.
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 advised 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% progress for the cloud unit. Working revenue generated by the unit was $10.6 billion, exceeding the typical projection of $10.1 billion.
“AWS progress 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 going through rivals Google and Microsoft,” mentioned Sky Canaves, an analyst at Emarketer.
Jassy’s warning on AWS progress constraints overshadowed a reasonably sturdy vacation quarter, suggesting the corporate’s most important e-commerce and logistics enterprise is heading off competitors from Walmart Inc. and low cost upstarts like Temu and Shein.