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Amazon to invest £119B in data centres to support AI demand

Written by Tue 2 Apr 2024

Image Credit: Reuters

Amazon plans to invest £119 billion ($150 billion) in data centres over the next 15 years to support artificial intelligence (AI) demand.

The investment will be split between expanding capacity in existing service areas and moving into new ones.

For example, the company plans to grow capacity in existing markets in the US, including Oregon and the North Virginia corridor. New developments are also planned in new markets in the US, like in Mississippi and globally, in Saudi Arabia and Malaysia.

“We are expanding capacity quite significantly. I think that just gives us the ability to get closer to customers,” said Kevin Miller, Vice President of Global Data Centres at AWS.

By growing global data centre capacity, Amazon will be better able to support demands for increased capacity from customers and secure its position as a cloud services market leader.

While data centre growth has been strong for many years, the interest in high-data applications like AI and IoT indicated another surge in demand in the near future. Early last year, McKinsey predicted 10% growth year-over-year through 2030, but to many, that estimate seems low particularly with the recent surge of interest in AI.

It is also possible that Amazon was spooked by slow growth in 2023 when AWS cloud services hit a record low simultaneously when competitor, Microsoft’s Azure, grew market share faster than expected. While AWS still has a strong lead over Azure, in second place behind Google, it appears to be securing its market share with a £119.3 billion ($150 billion) planned investment through 2040.

In 2023’s Q1 earnings call, CFO at Amazon, Brian Olsavsky, said while total capital expenditures would be lower in 2023 than in 2022, the company would continue to invest in key areas like AWS customer requirements and ‘investments to support large language models and generative AI’.

This investment in infrastructure that would support AI needs is aligned with the company’s ongoing AI investment, as evidenced by the £3.1 billion ($4 billion) investment in a minority stake in OpenAI competitor Anthropic, also announced this week.

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Written by Tue 2 Apr 2024

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