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Amazon says $220 billion data center spend follows two-year payback lag
The company also reported $200.6 billion in net sales for the quarter ended June 30 and said its AWS backlog reached $496 billion.
Amazon CEO Andy Jassy told investors on July 30 that capital spending for data centers typically begins about two years before the company can monetize servers housed there, framing the timing behind its large buildout. The company said it expects to spend about $220 billion on data center capital for the full year, up from roughly $200 billion projected earlier, and attributed the increase to higher memory prices.
Amazon reported net sales of $200.6 billion for the quarter ended June 30, up 20% year over year. Operating income rose to $27.5 billion from $19.2 billion a year earlier, while AWS, its cloud division, grew 37% to $42.2 billion in sales, which Amazon called its fastest growth in 18 quarters.
On the cloud side, Jassy said AWS backlog, work customers have contracted for but that has not started yet, reached $496 billion. Amazon reported net income of $62.6 billion, which included a $53.4 billion non-operating gain primarily from its investments in Anthropic, a gain the company said was not money it can readily spend.
The coverage notes that Amazon spent $53.1 billion on capital projects in the quarter, and that the construction timeline means the cash outlay precedes revenue generation. The article also defines free cash flow as what remains after covering operating costs and capital spending.