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Amazon to Invest $4 Billion in Cloud Infrastructure in Chile, Eyes 2026 Launch

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Amazon Web Services (AWS) will invest $4 billion to build its first data centers in Chile, establishing a dedicated cloud region that is set to go live by the second half of 2026, the company confirmed in an interview with Reuters on Tuesday.

This marks AWS’s third cloud region in Latin America, after Brazil and Mexico, and reflects the tech giant’s continued push to expand its generative AI and cloud services footprint across high-growth emerging markets.

“All the necessary permits have been approved,” said Juan Pablo Estevez, AWS’s head of South Latin America, who emphasized the project’s potential to provide “substantial computing power” to local and regional businesses.

Environmental Considerations

AWS’s expansion comes amid concerns over the environmental impact of data centers in drought-stricken Chile, where Google was forced to revise a $200 million data center plan due to environmental backlash last year.

  • Estevez noted that AWS’s Chile facilities will use water-based cooling for only 4% of the year, equivalent to the consumption of just eight households over 15 years.

  • The remaining cooling needs will be met through air and evaporation-based technologies.

  • AWS has also matched 100% of its energy use with renewable sources since 2023.

Market Outlook and Growth

Despite AWS’s recent cloud revenue falling short of Wall Street forecasts, Estevez remains bullish on the regional outlook:

  • Chile’s cloud market is projected to grow 20.3% annually through 2028

  • Valued at $1.5 billion in 2023, it is expected to reach $1.9 billion by 2025

AWS already serves regional clients like Cencosud, MercadoLibre, and various mining companies, and will now compete directly with Microsoft Azure, whose Chilean center is set to go live this year.

Globally, Amazon operates 36 cloud regions and 114 availability zones, powering key enterprise services for companies like Netflix, Sony, and General Electric.

Microsoft Scales Back on Data Center Leases Amid AI Spending Concerns

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Microsoft has pulled back from leasing new data center capacity in the U.S. and Europe, abandoning projects that would have used 2 gigawatts of electricity over the past six months. According to analysts at TD Cowen, the tech giant’s decision is driven by an oversupply of data center capacity relative to its current demand forecast, particularly in light of its shifting approach to supporting OpenAI’s ChatGPT workloads.

Shifting Focus and Market Impact

Investor skepticism has risen regarding the large-scale artificial intelligence (AI) investments made by U.S. tech giants, partly due to slower-than-expected returns and competition from Chinese startup DeepSeek, which offers AI solutions at significantly lower costs. As part of its pullback, Microsoft has decided not to support additional AI workloads, particularly those associated with OpenAI’s ChatGPT, a move that has been closely watched by industry analysts.

Microsoft’s withdrawal from certain data center projects has led to competitors stepping in to fill the void. Alphabet’s Google and Meta Platforms have moved to backfill the data center capacity, with Google focusing on international markets and Meta stepping in for U.S. projects. Despite these shifts, Microsoft remains committed to growing its infrastructure, with plans to invest $80 billion in AI infrastructure during this fiscal year, in line with its ongoing AI strategy.

Continuing Investment and Future Outlook

While Microsoft’s share price saw a slight decline of over 1% on Wednesday, the company reassured investors that its infrastructure growth plans will remain strong across all regions. The company has already scrapped leases with at least two private data center operators, a decision that aligns with its strategic pacing and adjustments to its AI needs.

Executives from both Microsoft and Meta defended their massive AI investments after the reveal of DeepSeek’s cost-effective technology in January, emphasizing that these investments are crucial to remaining competitive in the rapidly evolving AI space. Alphabet has also committed to increasing its AI spending this year, planning $75 billion, a 29% increase over Wall Street’s expectations.

Conclusion

Microsoft’s decision to scale back on data center leases highlights the evolving landscape of AI infrastructure spending, as companies adjust their strategies in response to market competition and changing demand. Despite this pullback, Microsoft’s commitment to AI remains strong, with a continued focus on investing heavily in the technology’s future.

Nvidia-Backed Cloud Firm CoreWeave to Acquire AI Platform Weights & Biases

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CoreWeave, a cloud infrastructure provider backed by Nvidia, announced on Tuesday its acquisition of the AI developer platform Weights & Biases. The move is part of CoreWeave’s strategy to expand its cloud offerings ahead of its upcoming IPO.

The acquisition will integrate CoreWeave’s infrastructure and managed cloud services with Weights & Biases’ AI platform, which is widely used for training, evaluating, and monitoring AI models. Prominent technology companies such as OpenAI and Meta utilize Weights & Biases’ platform to build and deploy AI applications.

While the financial terms of the deal were not disclosed, sources familiar with the transaction told The Information that the acquisition could be valued at approximately $1.7 billion.

CoreWeave, based in Roseland, New Jersey, has seen significant growth, reporting an eight-fold increase in revenue for 2024. The company is also advancing with its plans to list publicly later this year, with expectations to achieve a valuation exceeding $35 billion in its New York flotation.

CoreWeave’s customer base includes major players like hedge fund Jane Street, as well as tech giants Meta, IBM, and Microsoft.