An immense demand for AI services is forcing some of the world’s biggest tech companies including Amazon and Microsoft that provide cloud computing services to reach their current capacity.
Amazon warned investors that although it is investing around A$158.85 billion, it could face capacity constraints in its cloud computing division.
Most of the pledged investment is going toward developing data centers, homegrown chips and other equipment required to provide AI services.
Chief Executive Officer Andy Jassy said the supply of chips from third parties as well as Amazon’s own chip design unit, along with power capacity were limiting the ability of Amazon Web Services to bring new data centers online.
He noted that those constraints were expected to ease in the second half of 2025.
“It is true we could be growing faster were it not for some of the constraints on capacity,” said Jassy on a conference call, reported Bloomberg.
Amazon spent $26.3 billion (A$41.78 billion) in capital expenditures in the last three months of 2024, the majority of which went toward AI-related projects within AWS.
AWS revenue jumped 19% to $28.8 billion (A$45.75 billion) in the quarter ended December 31 – the third consecutive quarter that the division recorded a 19%.
Last month, Microsoft which has previously partnered with ChatGPT maker OpenAI and also unveiled its Copilot+ technology for PCs last year, echoed similar concerns over the growth of its cloud-computing business.
Revenue at its Azure cloud division will increase as much as 32% in its fiscal third quarter, not much more than it did during the last three months of 2024.
Microsoft said Azure AI services grew 157%. But overall sales in the key cloud unit are impacted since the company still doesn’t have enough data center capacity to meet customer needs, Chief Financial Officer Amy Hood told Bloomberg.
Microsoft has said it expects to spend A$127.8 billion this fiscal year on AI data centers as it competes with Amazon and Google’s cloud businesses.
