Amazon $5 billion Nvidia AI server racks sit idle in warehouses

Amazon, the online retail and cloud computing giant, is spending billions of dollars on artificial intelligence hardware, but its new server racks are sitting in warehouses because its data centers lack the electricity needed to run them, according to a report by Business Insider.

Internal emails show that Amazon expected to receive $5 billion worth of Nvidia AI server systems in August, followed by another $3 billion worth each month for the foreseeable future. Under a new receipt process, Amazon Web Services expected to receive roughly $5 billion worth of Nvidia GB300 server racks at United States facilities before final deployment.

While some sites had physical space for more racks, they lacked sufficient power to turn them on, according to people familiar with the matter. As a result, the completed equipment must be stored in intermediate warehouses until the facilities are ready. At least one team lacked a clear forecasted path for getting the incoming racks into data centers at the time.

A lack of new electricity capacity is one of several bottlenecks slowing the development of some data centers, contributing to the phenomenon known as dark GPUs, in which expensive chips remain idle due to power shortages. The delays are adding financial pressure on large projects because companies must spend massive amounts upfront to secure the hardware.

Prashant Kalyanaraman, the infrastructure chief for Amazon Web Services, described Amazon’s artificial intelligence business as hugely free cash flow negative and said he expected cash flow to remain negative for another couple of years, according to Benzinga. Amazon plans to spend $220 billion on capital investments across the company this year.

Its free cash flow fell to negative $7.6 billion for the 12 months ended June 30, compared with positive $18.2 billion a year earlier. Even the biggest balance sheet in the room can run out of wall sockets.