Amazon CEO Andy Jassy shared the update on October 23 during a video podcast with Andreessen Horowitz co-founder Ben Horowitz and general partner Erik Torenberg. He said the company is struggling to keep pace with demand from AI research labs and enterprise customers.
The situation highlights the growing pressure on major cloud providers to expand data centres, computing resources and supporting infrastructure as businesses invest heavily in artificial intelligence.
AI Demand Drives Cloud Capacity Constraints
The rapid adoption of AI tools has increased demand for the computing power needed to train and run advanced models. AI companies require large amounts of processing capacity, while enterprises are increasingly using cloud platforms to develop applications, automate workflows and deploy AI services.
Jassy said AWS's major blocks of computing capacity for 2027 are largely booked, although the company continues to reserve some resources for on-demand customers and services such as Amazon Bedrock and Amazon Elastic Compute Cloud (EC2).
He also indicated that a substantial amount of capacity for 2028 has already been committed, suggesting that demand is extending well beyond the immediate future.
Amazon Plans Heavy Investment in Infrastructure
To address rising demand, Amazon is committing substantial capital to infrastructure, including data centres, servers, networking equipment and AI-related technologies.
The company has indicated that its capital expenditure could reach approximately $220 billion in 2026, reflecting the scale of investment required to support its cloud and AI ambitions.
Jassy said additional investment could be justified while demand remains strong and capacity is constrained. However, building infrastructure at this scale requires careful planning because data centres take time to develop and need significant supplies of electricity, specialised equipment and advanced chips.
AWS Faces Growing Competition in the AI Market
AWS competes with Microsoft Azure and Google Cloud, both of which are investing heavily in infrastructure to meet rising demand for AI computing.
Cloud providers are competing not only on available computing capacity but also on specialised AI chips, software tools, model access and the ability to help customers deploy applications efficiently.
Amazon Bedrock allows businesses to access and build applications using AI models, while EC2 provides computing infrastructure for running applications. Both services are important to AWS's efforts to serve customers adopting AI technologies.
Balancing Growth With Investment Risks
Although strong demand creates opportunities for AWS, the scale of infrastructure spending also presents financial and operational challenges. Amazon must balance the need to add capacity against the risk of investing too aggressively if demand changes.
Jassy has noted that the company can adjust purchases of servers and networking equipment as requirements evolve, providing some flexibility after data-centre construction.
Amazon's ability to expand capacity, secure energy supplies and convert AI demand into sustainable revenue will remain important as competition intensifies. With major portions of its cloud capacity already committed years ahead, the company faces pressure to scale its infrastructure while maintaining efficient long-term investment.
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