Amazon plans to invest nearly $150 billion over the next 15 years in data centers to handle the anticipated surge in demand for artificial intelligence applications and other digital services. This massive investment is a strategic move to maintain its dominance in the cloud services market, where it holds about twice the market share of its closest competitor, Microsoft.
Despite a slowdown in sales growth at Amazon Web Services (AWS) last year due to cost-cutting measures and delayed modernization projects by business customers, spending is now picking up again. Amazon is keen to secure land and electricity for its power-intensive facilities. “We’re expanding capacity quite significantly,” said Kevin Miller, an AWS vice president who oversees the company’s data centers.
Over the past two years, Amazon has committed to spending $148 billion to build and operate data centers worldwide. The company plans to expand existing server farm hubs in northern Virginia and Oregon and venture into new areas, including Mississippi, Saudi Arabia, and Malaysia.
While Amazon’s planned expenditure on server farms significantly exceeds the public commitments from Microsoft and Google, it’s important to note that neither company discloses data center-related spending as consistently as Amazon. Amid broader cost-cutting at Amazon, AWS’s capital expenditures on data centers decreased by 2% in 2023 for the first time, even as Microsoft increased its own spending by more than 50%.
Much of Amazon’s data center expansion is aimed at meeting a rise in demand for corporate services like file storage and databases. However, these facilities, along with advanced and expensive chips, will also provide the massive computing power required for an expected boom in generative artificial intelligence. Amazon is building its own tools to rival OpenAI’s ChatGPT and has partnered with other companies to power AI services with its servers.
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