Amazon Will Spend $100B On AI Data Center Developments

Amazon plans to spend more than $100B on new data centers over the next decade, a massive investment in artificial intelligence infrastructure for the world’s largest data center user.

The surge in capital spending on data centers, first reported by The Wall Street Journal, will grow Amazon’s substantial development pipeline. The Seattle-based tech giant has at least 216 data center buildings scheduled to come online over the next several years. 

Still, the company is fighting the perception that its Amazon Web Services cloud business is losing ground in the AI arms race to competitors like Microsoft that were quicker to make big public bets on generative AI and have subsequently nibbled away at Amazon’s market share. 

“We have to dive in. We have to figure it out,” AWS Chief Financial Officer John Felton said, according to the WSJ. “It’s a fascinating time to be here and think about how we can really think differently about how cloud computing works and how we can think differently about serving customers in the world of GenAI.”

While this is the first time Amazon’s leadership has quantified the firm’s overall data center strategy in such stark terms, the scale of the company’s planned spending comes as little surprise to industry observers. In just the first half of this year, Amazon announced more than $50B worth of new data center development in the U.S. alone, according to CIO Dive. 

Amazon has announced $35B in new spending on several projects across Virginia, where Amazon is building the bulk of its data center infrastructure. The firm has data centers under development across the state, expanding from traditional industry hubs like Loudoun and Prince William counties into areas like King George and Louisa counties that saw little data center build-out until now. 

Since January, Amazon has announced an $11B data center campus in Indiana and a $10B investment in a pair of campuses in Mississippi. The company is also building a major campus adjacent to a nuclear power plant in Salem Township, Pennsylvania. Outside the U.S., Amazon has announced billions in spending on new data centers since the start of the year in places like Taiwan, Singapore and Germany. 

Hyperscale cloud providers are driving an unprecedented data center building boom as they ramp up data center spending to support an anticipated wave of AI-driven demand. 

AWS is the world’s largest cloud provider by a significant margin, accounting for 31% of all cloud spending, according to Synergy Research Group. Second-place Microsoft has a 25% market share.

But Amazon’s lead has slipped since late last year. Microsoft, along with other competitors like Google, were faster to embrace AI cloud services as a growth driver. Microsoft was the first major tech firm to go all-in on AI, partnering with ChatGPT creator OpenAI and quickly incorporating AI features into its Azure cloud products. Microsoft has gained more than 2% market share since mid-2023, according to Synergy Research Group — growth that Microsoft leadership has attributed largely to AI.