Despite plans to invest almost $100 billion this year, with the majority of that money going toward data centers, in-house chips, and other equipment to provide artificial intelligence services, Amazon.com Inc. cautioned investors that it may encounter capacity issues in its cloud computing segment.

Andy Jassy, the CEO, is investing heavily to maintain Amazon's leadership in cloud computing services because he is adamant about the company becoming an AI supermarket. However, he cautioned that development would be "lumpy" and alluded to potential capacity problems for Amazon brought on by hardware delivery delays and inadequate electricity.

The concerns are similar to those of rival Microsoft Corp., which said last week that its lack of data centers hindered its development in cloud sales due to demand for its AI technologies.

According to Jassy, Amazon Web Service’s ability to launch new data centers is being constrained by the supply of chips, both from outside vendors and Amazon's own chip design team, as well as power capacity. According to him, the restrictions would probably loosen in the second half of 2025.

The vast majority of Amazon's $26.3 billion in capital expenditures during the final three months of 2024 were allocated to AWS AI programs. During the call, Jassy informed analysts that the sum was "reasonably representative" of the rate of expenditures the business anticipated making in 2025.

According to the firm, AWS sales increased by 19 percent to $28.8 billion for the quarter that concluded on December 31. The cloud unit grew by 19 percent for the third consecutive period. The unit's operating income above the average expectation of $10.1 billion, coming in at $10.6 billion.

Jassy's warnings about AWS's growth limitations overshadowed a rather successful holiday quarter, indicating that the company's core logistics and e-commerce division is battling off competition from Temu and Shein, as well as Walmart Inc.

Profits will probably suffer as a result of the AI race. According to a statement from the Seattle-based business, operating profits for the quarter ending in March will range from $14 billion to $18 billion. Based on data provided by Bloomberg, analysts anticipated $18.2 billion on average. Compared to an average expectation of $158.6 billion, first-quarter sales could reach $155.5 billion.