Amazon knows how to build big. The AI boom is testing just how big it can go.
Amazon's $220 billion AI buildout is draining cash as power shortages, costly Nvidia servers, and construction challenges pile up.
Amazon is embarking on an unprecedented spending spree to build more AI data center capacity than any other company. Despite extensive experience, Amazon is struggling to bring this capacity online quickly enough, as evidenced by internal documents showing the company receiving billions of dollars in Nvidia GPUs before they can be deployed.
An internal staff meeting in September revealed that AWS CFO John Felton jokingly informed Prasad Kalyanaraman, the executive overseeing Amazon's AI infrastructure expansion, that the company's free cash flow had become negative as a result. This marks a stark contrast to just two years ago, when Wall Street was debating how to use Amazon's growing cash reserves.
The company's AI business is now significantly free cash flow negative, with Kalyanaraman expecting it to remain so for the next couple of years. Amazon's previous big bets, such as cloud computing, fulfillment centers, and its delivery network, have ultimately led to the creation of highly profitable businesses. However, the scale and complexity of these new projects, along with various bottlenecks, are presenting unprecedented challenges even for a cloud pioneer.
Written by urgent.news from Business Insider's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
