Top hyperscalers are spending large amounts of money on energy to support AI infrastructure — and plan to continue that spending into the next several quarters.
Microsoft, Google, and Amazon all released third quarter earnings this week, and all have spent billions of dollars this year to shore up electricity for data centers, most recently via investments in nuclear power. In some cases, the extremely long lead times for getting new data center capacity online is already slowing down earnings.
Microsoft, which reported earnings on Wednesday, cited delays in data center infrastructure as the reason the company won’t be able to meet demand for its cloud products in the coming fiscal quarter.
“This demand all showed up pretty fast,” CEO Satya Nadella told investors on a call Wednesday afternoon. “We ran into a set of constraints, which are everything, because [data centers] don’t get built overnight.”
In the long run, Microsoft needs power, and lots of it. Nadella said that infrastructure is coming, if not this quarter then soon: “I feel pretty good that going into the second half of even this fiscal year…some of that supply-demand will match up.”
Microsoft announced earlier this year that it’s poised to spend up to $16 billion on power in the next two decades to revive the remaining nuclear reactor at Three Mile Island. That reactor isn’t likely to come online until 2028.
Amazon, which reported earnings on Thursday, also pointed to capacity constraints — though CEO Andy Jassy said the problem is “primarily chips.”
“I think pretty much everyone today has less capacity than they have demand for,” Jassy said. “The faster we grow, the faster we have to invest capital in data centers, and networking gear and hardware.”
The company expects to spend $75 billion in capex in 2024, he added, “the majority of the spend to support the growing needs for technology infrastructure, primarily related to AWS as we invest to support demand for our AI services.”
Google parent Alphabet didn’t directly address power access challenges, but reported a quarterly capex of around $13 billion, which is nearly double that of the third quarter of 2023., The majority of those expenditures, the company said, were dedicated to “technical infrastructure,” including servers and data centers. Moving forward into Q4, those costs are expected to remain just as high, and increase even further in 2025.
In the third quarter, Alphabet announced more than $7 billion in planned data center investments, primarily in the U.S. The company also inked a deal to buy up to 500 MW of nuclear power from Kairos Power, which is set to bring the first of several small modular nuclear reactors online by 2030.
Meta, which has a smaller data center footprint, also reported earnings this week. The company expects its capex spend to increase by as much as 43% this year, and continue to increase next year, in large part because of “expanded infrastructure,” namely data centers and servers.
