Amazon to invest $12B in new AI data centers
What's the story
Amazon has announced plans to invest $12 billion in new data center campuses in Louisiana. The investment will be used to build infrastructure for artificial intelligence (AI) and cloud computing. The campuses will be located in Caddo and Bossier Parishes, northwestern Louisiana. This move is part of Amazon's larger plan to spend a whopping $200 billion on capital expenditures in 2026.
Employment impact
Job creation and economic boost
The new data center campuses are expected to create 540 full-time jobs. In addition, they will support around 1,700 other roles such as electricians, HVAC technicians, and security specialists. This is a major boost for the local economy and job market in Louisiana.
Market reaction
Wall Street's skepticism
Despite the massive investment, Wall Street has been skeptical about Amazon's capital expenditure (capex) plans. The skepticism was reflected in a nine-day-long decline in Amazon's shares after its February 5 earnings report, which wiped off over $450 billion from its market value. A major chunk of this spending is expected to be directed toward AI-related initiatives like data centers, chips, and networking equipment.
Industry competition
Data center arms race
The tech industry is witnessing a race among companies to expand their data center footprints. This is mainly due to the growing demand from businesses looking to run AI models. Amazon, Microsoft, and Google have all invested hundreds of billions of dollars in building massive data centers. Meta has also chosen Louisiana as the site for its Hyperion data center in a $27 billion joint venture with Blue Owl Capital.
Community pushback
Community concerns
The rapid expansion of AI data centers by tech companies has faced some resistance from local communities. Residents have raised concerns about these facilities draining electricity and water resources, and negatively impacting their quality of life. Microsoft had to abandon a planned site in rural Wisconsin after residents raised environmental and financial concerns.
Mitigation measures
Amazon's response to concerns
In response to these concerns, Amazon has said that it worked with Southwestern Electric Power Company to cover all costs associated with the new data center campuses. The company also plans to use natural air for cooling whenever possible, in a bid to reduce electricity demand. Further, the Louisiana facilities will only use surplus water from the surrounding area, ensuring no strain on local water supplies.