AWS Stores Nvidia Racks Due to Power Shortage, $5 Billion Already Anticipated

AWS changes its rules to account for Nvidia GB300 racks earlier, even if they remain idle due to a lack of available power. The investment is rising: $220 billion in capex targeted this year, a free cash flow that has turned negative again, and already $5 billion in racks expected in the United States, followed by $3 billion per month.

Record Spending and Early Acquisition at AWS

Amazon plans to invest around $220 billion this year, a sum that surpasses that of other major tech players. Its free cash flow turned negative in the previous quarter for the first time since 2023 and could remain so for some time. The early acquisition of racks, part of a broader AI expansion, increases pressure on cash flow. For AWS, the goal is to secure hard-to-find GPU racks ahead of its rivals, even if some sites are not yet able to utilize them. This early acquisition can lead to several billion dollars of equipment being tied up before it starts generating revenue in the cloud. Until now, AWS only took delivery of a completed rack once it arrived at a data center; the new method involves settling and accounting for certain racks earlier in the logistics process. Furthermore, it has become more challenging to borrow funds for certain projects, as initial investments are needed to secure access to Nvidia GPUs and other AI equipment.

Limited Power Supply: Idle Equipment and Inactive GPUs

The lack of new electrical capacity is one of the obstacles slowing the development of certain AI data centers. This context fosters the phenomenon of inactive GPUs: AI chips and servers purchased may remain unused, either due to a lack of power or because of system design flaws that prevent their full utilization after being plugged in. At AWS, some facilities had space to accommodate more racks but lacked sufficient power to activate them, leading to the storage of completed equipment in intermediate warehouses. At least one AWS team did not have a clear solution for integrating incoming racks into data centers at that time. When sites are not ready, these initial investments can tie up significant amounts.

GB300 Orders: $5 Billion in Expected Arrivals, Then $3 Billion Per Month

AWS expects to receive nearly $5 billion worth of Nvidia GB300 server racks in its U.S. centers before they are officially put into service. According to internal emails, the company is then anticipating the arrival of about $3 billion in additional GB300 racks each month for an indefinite period.

Amazon Justifies the Strategy, Jassy Promises Returns

According to an Amazon spokesperson, positioning completed hardware near deployment sites is optimal business practice to enable installation as soon as capacity allows. He also stated that Amazon has proven mechanisms in place to track infrastructure assets and refuted the notion that there is no solution to integrate the racks into data centers. Andy Jassy asserted that the company has a clear vision of significant returns on its AI investments, describing this technology as "a once-in-a-lifetime opportunity." In the annual letter to shareholders, he reminded that Amazon has already gone through a similar cycle during the first major growth wave of AWS and expects to experience a comparable momentum in the next one.