Amazon CEO Andy Jassy said on Thursday that the Amazon Web Services cloud business could grow faster if not for "capacity constraints" across its data centers.
He said the shortage has been caused by difficulty procuring AI chips, server components like motherboards, and the energy to power data centers.
"It is true that we could be growing faster, if not for some of the constraints on capacity," Jassy said during Thursday's call with analysts.
On Thursday, AWS reported a 19% increase in sales for the fourth quarter at $28.8 billion, which was slightly below street estimates. Amazon's stock dropped roughly 4% in after-hours as the company gave lower-than-anticipated first-quarter guidance.
Jassy's remarks echo recent statements made by cloud rivals Microsoft and Google. Microsoft's CFO Amy Hood said last week that the company is in "a pretty constrained capacity place" when it comes to meeting demand, while Google's leadership said on Tuesday that it ended 2024 with "more (AI) demand than capacity."
Jassy said on Thursday that he expects the constraints to "relax" in the second half of 2025, adding it is "hard to complain" when AWS's AI business is on pace to generate "multi-billion" dollars in annual sales.
Amazon expects AI demand to continue growing. For 2025, the company forecast roughly $105 billion in capital expenditures, mostly in data centers, after spending a record $26.3 billion during the fourth-quarter.
Jassy said AWS doesn't make that kind of financial commitment unless there are "significant signals of demand."
"When AWS is expanding its capex, particularly what we think is one of these once-in-a-lifetime type of business opportunities like AI represents, I think it's actually quite a good sign, medium to long term for the AWS business," Jassy said.
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