Consistent signals from major cloud providers! Amazon and Microsoft: Data center supply cannot keep up with AI demand, increasing efforts to invest!

Amazon issued a warning that the surge in AI demand is challenging cloud computing capacity, with Microsoft also sending a similar signal last week. Overnight, Amazon stated in its earnings call that despite plans to invest approximately $100 billion by 2025, its cloud computing division may still face capacity constraints. This warning echoes similar signals from Microsoft last week, reflecting the immense pressure AI demand is placing on cloud computing infrastructure. Amazon CEO Andy Jassy is determined to make Amazon an "AI supermarket" and is investing heavily to maintain the company's advantage in cloud computing services. Nevertheless, he warned that growth will be "bumpy" and hinted that Amazon may face supply issues related to delays in hardware acquisition and insufficient power supply. Andy Jassy stated during the earnings call: If it weren't for some capacity constraints, our growth could be faster, and these constraints mainly stem from hardware delivery delays and insufficient power supply. To maintain its leading position in cloud computing services, Amazon is making significant investments. In the fourth quarter of 2024, the company invested $26.3 billion in capital expenditures, the majority of which was allocated to AI-related projects within AWS. Jassy stated that this level of spending is "quite representative" of the company's planned investment scale for 2025. Jassy pointed out that chip supply (including third-party and Amazon's self-developed chips) and power capacity are limiting the launch of new AWS data centers, and he expects these constraints may ease in the second half of 2025. Despite the challenges, Amazon Web Services (AWS) still achieved a 19% revenue growth in the fourth quarter of 2024, reaching $28.8 billion. This marks the third consecutive quarter that AWS has maintained a 19% growth rate. The division's operating profit reached $10.6 billion, exceeding analysts' average expectations of $10.1 billion. However, the AI race may pressure Amazon's profits, as the company expects its operating income for the first quarter of 2025 to be between $14 billion and $18 billion, below analysts' average expectation of $18.2 billion