On November 4, AMZN closed up 6.12%, while CoreWeave, which is expanding through leased computing capacity, fell 9.90%. The market priced two companies in the same AI industry chain in opposite ways.
One explanation is that the harder it is to build new data centers, the more advantageous it is for giants with existing facilities and computing capacity. That day, 40 of 41 local ballot measures involving data centers across the U.S. were voted down; another emerging cloud provider, IREN, fell 11.24%. These votes and market moves have already happened, but they do not yet prove that Amazon’s expansion plans will be changed.
But the other side cannot be ignored: Amazon’s free cash flow has already turned negative. Building fewer data centers could ease spending pressure, but it could also limit future supply. Next, we need to see whether local restrictions actually take effect, and whether Amazon’s capital expenditures and cash flow change as a result. If approvals become increasingly difficult to obtain, should the market assign a higher valuation to existing computing capacity, or worry first that growth will be constrained?
One explanation is that the harder it is to build new data centers, the more advantageous it is for giants with existing facilities and computing capacity. That day, 40 of 41 local ballot measures involving data centers across the U.S. were voted down; another emerging cloud provider, IREN, fell 11.24%. These votes and market moves have already happened, but they do not yet prove that Amazon’s expansion plans will be changed.
But the other side cannot be ignored: Amazon’s free cash flow has already turned negative. Building fewer data centers could ease spending pressure, but it could also limit future supply. Next, we need to see whether local restrictions actually take effect, and whether Amazon’s capital expenditures and cash flow change as a result. If approvals become increasingly difficult to obtain, should the market assign a higher valuation to existing computing capacity, or worry first that growth will be constrained?