Despite constrained growth in AWS, Amazon is investing $105 billion in 2025 to expand AI-driven data centers, with CEO Jassy calling AI a “once-in-a-lifetime” opportunity to generate multi-billion-dollar sales

Amazon CEO Andy Jassy has disclosed that the company's cloud computing division, Amazon Web Services (AWS), is grappling with growth limitations due to hardware shortages and energy supply issues. These constraints are hindering Amazon cloud growth, especially as demand for AI services surges. Despite these challenges, Jassy remains optimistic about AWS’s future, particularly in the burgeoning field of artificial intelligence (AI).

Jassy explained that while AWS growth could be accelerating more rapidly, constraints on securing essential hardware like AI chips and server components, as well as difficulties obtaining sufficient energy for data centers, are holding back the division’s potential. He reassured analysts that these constraints are expected to ease later in 2025, allowing AWS to scale more effectively and drive Amazon cloud growth in the long term.

Substantial investment in AI infrastructure

Despite the constrained growth in AWS’s cloud business, Amazon is aggressively investing to meet the rising demand for AI services. Jassy described the AI market as a “once-in-a-lifetime” business opportunity, projecting that Amazon Web Services will eventually generate “multi-billion dollars” in annual sales from AI alone. To support this, Amazon has committed to a record $105 billion in capital expenditure for 2025, primarily focused on expanding AI-driven data centers.

This follows a strong financial outlay in the previous quarter, with Amazon spending $26.3 billion in Q4 2024 on infrastructure. Jassy noted that such significant investments in AWS reflect confidence in future demand, particularly for AI services, and emphasized that AWS typically does not make these types of financial commitments without clear indicators of strong market need. This signals a clear determination to maintain AWS growth despite current limitations.

Financial impact and market reaction

While AWS growth was up 19% year-over-year in Q4, totalling $28.8 billion, the performance still fell short of Wall Street expectations. As a result, Amazon news showed a 4% decline in the company’s stock in after-hours trading. Analysts also noted that Amazon’s first-quarter guidance was lower than anticipated, further contributing to concerns about AWS’s near-term growth prospects.

The constraints affecting AWS are not unique to Amazon. Other tech giants, including Microsoft and Google, have also reported similar struggles in scaling up their cloud services. Microsoft CFO Amy Hood recently acknowledged that the company’s Azure cloud services are also facing capacity limitations, while Google executives mentioned that they ended 2024 with more demand for AI than they could fulfill.

Despite these challenges, Jassy’s comments reflect long-term optimism for AWS’s role in the AI sector. The company remains committed to expanding its cloud infrastructure and capitalizing on the potential of AI, with plans for further investment in the coming years to drive future Amazon cloud growth.