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Amazon is reportedly gearing up to invest nearly $150 billion over the next 15 years in data centers. This substantial financial commitment will equip the cloud-computing giant with the necessary resources to manage a projected rise in demand for AI applications and various digital services.
Bloomberg reports that this investment is a strategic display of dominance, to preserve Amazon’s leading position in the cloud services sector. Amazon currently holds about twice the market share of its closest competitor, Microsoft Corp.
An Amazon spokesperson confirmed to ReadWrite that the figures were based on its recent infrastructure announcements found on its website.
However, Amazon Web Services experienced its slowest sales growth on record last year, as corporate clients reduced expenses and postponed upgrades. Now, as spending begins to rebound, Amazon is eagerly securing land and energy for its energy-intensive operations.
In the last two years, Bloomberg said its calculations indicate that Amazon has pledged $148 billion towards the building and operation of data centers globally. The company aims to expand its server farm locations in northern Virginia and Oregon, and venture into new areas such as Mississippi, Saudi Arabia, and Malaysia.
Despite the expansion, AWS saw a 2% decrease in its data center investments in 2023, marking its first reduction, even as Microsoft ramped up its expenditures by over 50%, as reported by Dell’Oro Group. However, Amazon’s Chief Financial Officer announced last month that there would be an uptick in capital investments this year to fuel AWS’s expansion, encompassing projects related to artificial intelligence.
“As we look forward to 2024, we anticipate capex to increase year over year, primarily driven by increased infrastructure capex to support growth of our AWS business, including additional investments in generative AI and large language models,” said CFO Brian Olsavsky.
Amazon’s plans for AI expansion
While Amazon’s expansion of its data centers aims to cater to the growing need for corporate services, its focus on sophisticated, high-cost chips will provide the substantial computing power needed for the predicted increase in generative AI.
Reports suggest that Amazon is developing proprietary tools to compete with OpenAI’s ChatGPT, and has developed partnerships with various companies to enhance its AI services using its servers. As a result, Amazon expects to generate AI-related revenue amounting to tens of billions of dollars.
Featured image: Canva / Web Summit Rio
