Amazon reportedly to spend $150B to build data centers needed for AI boom, ‘get closer to customers’
Amazon is reportedly planning to spend a whopping $150 billion within the next 15 years on building data centers — a move that will position the tech giant to be able to handle an expected explosion with artificial intelligence applications and other digital services.
The spending spree, earlier reported on by Bloomberg, will also allow Amazon to maintain its top spot in the cloud services market, where it holds roughly twice the share of No. 2 player Microsoft.
“We’re expanding capacity quite significantly,” said Kevin Miller, a vice president at AWS, or Amazon Web Services, Amazon’s cloud computing subsidiary used by upwards of 1.45 million businesses, according to an internal report.
“I think that just gives us the ability to get closer to customers,” Miller added of the Seattle-based firm’s investment in more data centers, according to Bloomberg.
Amazon has already committed to spending $148 billion over the past two years to build and operate data centers globally in new regions like Mississippi, Saudi Arabia, Malaysia and Thailand.
It will also use that hoard of funds to expand existing server farm hubs adjacent to a Washington metro in Virginia as well as in rural Oregon, which offers cheap hydroelectric power and appealing tax breaks, Bloomberg reported.
As it stands, Virginia and Oregon receive roughly $4 of every $5 AWS spends on US infrastructure.
But earlier this month, the Jeff Bezos-founded firm bought a site in northeast Pennsylvania in the shadow of a nuclear power plant that the forthcoming data center will use as a source of carbon-free energy for the digital hub to help the tech giant meet its emission goals, according to commercial property company CoStar.
Amazon bought the 1,200-acre property for $650 million, making it the largest individual US commercial sale so far this year, CoStar reported.
When AWS is done with construction, the data center’s campus will have the capacity to power the equivalent of the energy consumption of nearly 900,000 houses, or as much as 960 megawatts.
It also revealed a roughly $10 billion spend to acquire two data center campuses in Mississippi last month, considered the largest corporate project in state history, according to Bloomberg.
There’s also rumblings of yet another AWS data center in Round Rock, Texas, as the company won zoning approval to build a data center and electrical substation next to a former ranch it already owns, which it bought as part of a similar spending spree during the pandemic.
Still, Amazon’s anticipated spending on data centers dominates commitments from Microsoft — which is entrenched in multiyear partnership with ChatGPT-maker OpenAI — and Alphabet’s Google, according to Bloomberg, though neither company has disclosed server farm-related spending and spokespeople at each firm declined weighing in on the topic.
In 2023, Microsoft boosted its spending on data centers by more than 50% while — for the first time ever — AWS’s capital expenditures on data centers shrank 2%.
Most of the ramped-up data center-related expenses is intended to meet a rising demand among corporation for large-scale file storage and databases, per Bloomberg.
However, the hubs will have such massive computing power that, along with chips, will be able to lend some of it to what’s required of AI-backed services.
To rival OpenAI, Amazon has been building out its own tools with the booming tech, including with a $4 billion in rival Anthropic, which was completed on Wednesday.
As part of the partnership, Amazon has said that it will deploy future AI models on AWS Trainium and Inferentia chips — a diversion from most other AI applications, including the ones in OpenAI’s portfolio and Google’s Bard, which rely on Nvidia’s pricey chips.
Anthropic’s co-founders, brother-sister duo Dario and Daniela Amodei, are likely very familiar with those chips as they both previously held VP-level positions for ChatGPT maker OpenAI.
