Business Insider reports Amazon is staging AI server racks in warehouses because some data centers lack power to turn them on
Business Insider confirms it: Amazon has warehouses of GPUs that can’t be installed, and is buying them so far in advance that a supply chain team said they “didn’t have a clear forecasted path” to installing them.
Context
If even Amazon cannot plug in GPUs fast enough, power and construction rather than chips may set the pace of the AI buildout, and delay when the spending earns revenue.
This is a secondhand post from Ed Zitron, a critic of the AI industry, about reporting by Business Insider's Eugene Kim. The article relies on internal documents, a recording and unnamed people, and Amazon disputed parts of it.
Deep dive
On October 19, Ed Zitron posted that Business Insider confirms Amazon has warehouses of GPUs that can't be installed, and is buying them so far in advance that a supply chain team said they didn't have a clear forecasted path to installing them.
Business Insider reported that AWS chief financial officer John Felton joked at a September staff meeting that infrastructure executive Prasad Kalyanaraman had taken the company free cash flow negative, and that Kalyanaraman said the AI business is hugely free cash flow negative and would likely stay negative for the next couple of years. Amazon is spending $220 billion this year on AI infrastructure, the article said.
According to internal emails it reviewed, Amazon set up an Early Rack Receipt process for Nvidia GB300 racks, taking ownership of them earlier rather than when they reach a data center, and one email projected about $5 billion of racks in August and roughly $3 billion a month after that. People familiar with the effort said some sites had space but not enough power, so racks were staged in warehouses. One email said at least one supply chain team lacked a clear forecasted path to install them.
An Amazon spokesperson called staging hardware near sites best business practice and disputed that the company lacks a forecasted path. Zitron's framing that the GPUs can't be installed goes further than the article, which describes delays.
What to expect next
Watch Amazon's next earnings report for free cash flow, capital spending and any comment on power constraints. Business Insider said AWS still expects demand to exceed capacity in 2027, so watch whether delays in power and labor slow AWS growth. Also watch whether Microsoft, Google and Meta report similar staging of equipment, since the article said the problem is not unique to Amazon.