Amazon.com Inc. (NASDAQ:AMZN) is buying billions in Nvidia Corp. (NASDAQ:NVDA) AI hardware, but some new server racks are sitting in warehouses because its data centers lack the electricity to run them, Business Insider reported Tuesday.

Internal emails show Amazon expected to receive $5 billion worth of Nvidia AI server systems in August, followed by another $3 billion a month. The company did not specify how long those purchases would continue.

Amazon Buys Before It Can Plug In

Amazon introduced an “Early Rack Receipt” program to secure Nvidia chips amid fierce competition, even before its data centers are ready.

Previously, Amazon waited until the equipment arrived at its data centers before taking ownership. Now it pays earlier, even if the servers have to sit in warehouses waiting for electricity.

Some sites have space for the racks but insufficient power, Business Insider reported. One supply-chain team didn’t know when the Nvidia servers it was receiving would actually be installed and ready to use.

Amazon called staging hardware near deployment sites “best business practice” and disputed suggestions that AWS lacked a broader deployment plan.

The Cost of Waiting

At a September internal meeting, AWS CFO John Felton joked to infrastructure chief Prasad Kalyanaraman, according to a separate Business Insider investigation:

“You’ve taken us free cash flow negative as a company, so congratulations.”

Kalyanaraman described Amazon’s AI business as “hugely free cash flow negative” and expected the company’s free cash flow to remain negative for another couple of years.

Amazon plans $220 billion in company-wide capital spending this year. Free cash flow fell to negative $7.6 billion for the 12 months ended June 30, from positive $18.2 billion a year earlier.

Unpowered servers cannot earn revenue, while delays may shorten the period before newer chips make them less competitive.

AI Bubble Odds Rise

Noted AI skeptic Ed Zitron estimated in September that $200 billion to $300 billion worth of AI chips could be sitting in warehouses or unpowered data centers because companies are buying hardware faster than they can put it to work.

Business Insider’s findings at Amazon provide concrete evidence of the problem he described, although the value of Amazon’s unused equipment remains unknown.

Polymarket traders now see a 10% chance of an AI bubble burst by Dec. 31, up from 6% days earlier. Odds reach about 22% by June 30, 2027, though just $35,000 has traded on that contract.

A “Yes” requires three specified industry stress events within 90 days. Unpowered chips alone do not qualify.

Amazon Says Demand Is Real

AWS revenue rose 37% to $42.2 billion in the second quarter, while its backlog reached $496 billion.

Felton told Axios that AWS AI servers were achieving payback in under three years, arguing that demand justifies the spending.

Morgan Stanley has warned of a 32-gigawatt power shortfall facing U.S. data centers through 2028, raising questions about how quickly purchased hardware can start earning revenue.

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