Amazon is racing to secure AI hardware earlier than before, even as data center power shortages leave some GPU systems waiting in warehouses.
Under a new Early Rack Receipt process, AWS expected to receive roughly $5 billion in Nvidia’s GB300 server racks at US facilities before final deployment, according to August internal emails reviewed by Business Insider. The company projected roughly $3 billion more in GB300 racks each month “for the foreseeable future,” one of the emails said.
Some AWS sites had room for more racks but not enough available power to turn them on, people familiar with the effort said, leaving finished equipment to be staged at intermediary warehouses until the facilities were ready.
At least one AWS team did not have “a clear forecasted path” for getting the incoming racks into data centers at the time, according to one of the emails.
Dark GPUs
A lack of new electricity capacity is one of several bottlenecks slowing the buildout of some AI data centers. This has led to a phenomenon known as dark GPUs, where AI chips and servers are purchased but can sit idle due to power supply issues or other challenges. (Dark GPUs can also refer to system design flaws that mean this gear isn’t fully used after being plugged in).
This is partly why financial pressure is mounting on big data center projects. Money must be spent upfront to secure supplies of Nvidia GPUs and other valuable AI components. But if some data centers aren’t ready to run, those early investments can tie up huge amounts of cash. Debt financing can fill in the gaps, but the market has become less willing to lend against some of these projects lately.
Trade-off
Amazon’s early-rack program is one piece of the cloud leader’s broader AI buildout, which is putting new pressure on its cash flow, as Business Insider exclusively reported this week. Amazon expects roughly $220 billion in capital expenditures this year — more than any Big Tech peer. Its free-cash-flow turned negative last quarter for the first time since 2023, and could stay negative for a while.
For AWS, the trade-off is securing scarce GPU racks before competitors do, even if some data centers are not yet ready to turn them on. But taking ownership earlier can tie up billions in equipment before it starts generating cloud revenue.
Previously, AWS took ownership of a finished rack only upon delivery to a data center, according to internal documents. Under the new approach, it can pay for and record certain racks earlier in the supply chain.
An Amazon spokesperson said the company routinely stages finished hardware near deployment sites so it can install it once capacity becomes available, calling the practice “best business practice.” The spokesperson added that Amazon has long-established systems for tracking infrastructure assets and disputed that the broader company lacked a path for getting racks into data centers.
Amazon CEO Andy Jassy previously said the company has a “clear line of sight” to strong returns from its AI investments, calling the technology a “once in a lifetime opportunity.”
“We’ve been through this cycle with the first big AWS growth wave, and liked the results,” Jassy wrote in Amazon’s annual shareholder letter. “We expect to feel similarly about this next wave.”
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