The AI race is forcing technology titans like Amazon to buy NVIDIA’s GB300 racks faster than they can be powered on, with a new report stating that the e-commerce giant received “$5 billion in deliveries” in the month of August, followed by $3 billion in shipments every month after that. The decision to order these racks in advance without having the infrastructure has resulted in its free cash flow dropping like flies, and according to the AWS CFO, the situation isn’t expected to improve for a couple more years.
Despite having no power for NVIDIA’s GB300 racks, Amazon’s capital spending is reportedly targeted at $200 billion for 2026
Additional details on Business Insider reveal that some AWS data centers reportedly have the physical space for the GB300 racks but not enough power to run them, so equipment is being staged in warehouses. Amazon also takes ownership of the hardware early, tying up cash well before the racks earn any revenue, but the impact it’s bearing is showcased in its free cash flow, which fell from around $50 billion in Q1 2024 to roughly $1 billion in Q1 2026.
The situation was even more ghastly in Q2 2026, when Amazon’s free cash flow slipped to negative $7.6 billion. The swing largely reflects a $66.1 billion year-over-year jump in net property and equipment purchases, but Amazon isn’t taking a backseat in these ludicrous expenses because its capital spending plans are said to reach a mammoth $200 billion or more for 2026. Then again, Amazon has never been a stranger to negative cash flow in the past.
The company went through the same scenario in 2022 and early 2023 when it was busy with its heavy logistics buildout. Unfortunately, this time the scale is massive, and the spending is aimed at AI infrastructure whose payoff timing is less certain and more worrisome. In an internal meeting held in September, AWS CFO John Felton joked to infrastructure chief Prasad Kalyanaraman, “You’ve taken us free cash flow negative as a company, so congratulations.”
Despite Business Insider stating that the remark was aimed at making a joke, Kalyanaraman didn’t dispute the premise, as he reportedly described Amazon’s AI business as deeply cash-negative and expects free cash flow to stay below zero for a couple more years. However, AWS’ revenue figures indicate that demand isn’t the problem, as the segment grew 37 percent in Q2 and its contract backlog reportedly stands at $496 billion.
The problem is timing, and with every GB300 rack sitting in a warehouse, it is capital earning zero, while power constraints, construction delays, and equipment lead times push revenue further out. NVIDIA won’t mind offering these shipments to lucrative customers like Amazon since it’s enjoying $3 billion to $5 billion in earnings, but the pace of future deliveries could eventually be questioned if clients cannot power on these racks.
Amazon’s playbook of spending ahead of demand has paid off before with cloud computing and logistics, so it’ll be interesting to see how quickly the company sets up power requirements for these racks and recoups its mammoth-sized investment.
News Source: Business Insider
About the author: Omar Sohail is a reporter and analyst for Wccftech’s mobile section, specializing in the technology and business of the mobile industry. His expertise lies in the intricate hardware supply chain, covering developments in semiconductor manufacturing, chip lithography, and camera sensor technology.
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