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AI AI AI

Why Amazon is now spending more on data centers than on e-commerce warehouses

AI is where the growth is.

7/1/24 8:51AM

Amazon, the company known quickly shipping goods to consumers from its online marketplace, is now spending more money on data centers than e-commerce warehouses, according to The Wall Street Journal. Why? In short: AI.

ISO its next “pillar” of growth

For years the company has been searching for its next “pillar of growth” to add to its first three pillars: its online marketplace, Amazon Prime membership program, and cloud-computing business Amazon Web Services. It’s hoping artificial intelligence will be a big part of that growth.

Build your own instead of competing for space

Access to data centers is a key battleground for those hoping to compete in AI, because the tech requires so much computing power.

According to a new report by real estate services company CBRE, “Large corporations face increasing difficulty securing data center capacity.” An astonishing rate of data center space is being leased before it’s even built.

So Amazon is spending even more on its own data centers in order to compete. Amazon plans to add at least 216 new data-center buildings in the next several years, according to WSJ reporting.

Everyone else is doing it

Amazon is clearly not the only one looking to AI for growth. A number of major tech companies are investing record sums on capital expenditure thanks to AI. (Companies in general can’t stop talking about AI and the topic reeks of FOMO)

Jon Keegan2/6/26

Report: OpenAI may tailor a version of ChatGPT for UAE that prohibits LGBTQ+ content

In June of last year, OpenAI CEO Sam Altman appeared in Abu Dhabi, UAE, alongside Nvidia CEO Jensen Huang to announce “Stargate UAE,” a project that includes a 1-gigawatt AI data center in Abu Dhabi, and a commitment to invest in the Stargate USA project.

OpenAI has announced that it is interested in jumping on the “sovereign AI” train, helping countries roll out their own AI services that reflect their own language, culture, and version of history.

Today, Semafor is reporting that OpenAI is in talks to develop a tailored version of ChatGPT for the UAE that would align with the kingdom’s conservative social laws and speech restrictions, such as disallowing discussion of LGBTQ+ content. The UAE-owned MGX investment firm is an investor in OpenAI.

The company announced its OpenAI for Countries initiative in May of last year, which aims to “help interested governments build sovereign AI capability in coordination with the U.S. government — rooted in democratic values, open markets, and trusted partnerships.”

The UAE is a monarchy with a history of human rights violations.

OpenAI’s plan for “democratic AI”

The UAE is a monarchy with a history of human rights violations.

Allen & Co Brings Together Media And Tech Titans In Sun Valley

Analysts think Amazon’s sky-high capex is a good thing, even if there’s “shock value” for investors

That said, several analysts also lowered their price targets for Amazon the day after its downbeat earnings report.

Rani Molla2/6/26

Jon Keegan2/6/26

Big Tech’s $1.1 trillion cloud computing backlog

Now that the big dogs of cloud computing have all reported their quarterly earnings, we can step back and get a sense of the searing demand that AI is driving toward their businesses.

Amazon, Google, and Microsoft each reported hundreds of billions in RPO (remaining performance obligations) — signed contracts for cloud computing services that can’t yet be filled and haven’t yet hit the books.

Collectively, the big three cloud providers reported a $1.1 TRILLION backlog of revenue.

This gargantuan demand could be good news for the “neoscalers” like CoreWeave and Nebius. But even CoreWeave is reporting a substantial backlog of its own — $55 billion last quarter.

Rani Molla

Apple of another’s AI

2/6/26

Apple is the only Big Tech company whose capex declined last quarter

One of these companies is not like the others.

Apple Headquarters in Cupertino of California

Rani Molla2/6/26

Big Tech capital expenditure soared in 2025. It’s going up another 50% in 2026.

Last quarter was one for the record books when it came to Big Tech’s purchases of property and equipment. Combined, Amazon, Alphabet, Microsoft, and Meta spent nearly $400 billion on capex, sans leases, in total last year, mostly in service of building out the AI infrastructure that they hope will furnish their futures.

And 2026 is only getting more expensive.

The four are expected to spend 50% more in 2026 than in 2025: roughly $600 billion. Amazon said it’s on the hook for $200 billion in capex this year, while Google expects to spend between $175 billion and $185 billion. Not too far behind, Meta estimated its 2026 capex would be $115 billion to $135 billion. Microsoft didn’t give an estimate, but analysts have its 2026 calendar year capex at around $114 billion. However, it should be noted that analysts’ expectations for 2026 were way lower than the reality for the rest.