Amazon’s (AMZN) shares fell on Thursday afternoon after the e-commerce giant revealed its plan to build a new data center worth $3 billion in the U.S. state of Mississippi.
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Specifically, the new tech heavyweight intends to build the infrastructure in Warren County, Mississippi, to support its AI and cloud computing workloads.
‘Largest Private Investment’ in Warren County
Amazon described the investment as “the largest private investment” in the county’s history. The new plan builds on the multinational technology company’s commitment of $10 billion in January last year to build two new data center complexes in two industrial parks in Madison County of the same state.
“With custom-designed chips, servers, and network architecture, these energy-efficient data centers expand cutting-edge technology in Mississippi,” Amazon noted.
The announcement comes a few days after Amazon returned to the U.S. bond market — after about a three-year hiatus — to raise $15 billion. It will possibly spend the funds on capital expenditure, making more acquisitions, or its stock buyback program.
Amazon Expands Capacity for AI Workloads
Amazon has continued to invest aggressively to expand its data center capacity to meet its AI workloads — just like its rival tech such as Meta (META), Alphabet (GOOGL), and Microsoft (MSFT), are doing. In June, the e-commerce heavyweight announced plans to invest $20 billion to build two new data centers in Pennsylvania.
Much more recently, Amazon — which is also active across cloud, digital media, entertainment, and satellite broadband services — unwrapped a $4.4 billion plan to build data centers in New Zealand.
Is There an AI Bubble or Not?
Before the year runs out, Big Tech companies are expected to spend close to $400 billion in AI infrastructure, according to Morgan Stanley’s (MS) estimates. This has led to fears of an AI bubble that could crash the stock market.
However, Jensen Huang, top leader of American chip-making colossus Nvidia (NVDA) — which is currently the most valuable company in the world — has pointed to his company’s blockbuster third-quarter earnings results as proof that the AI boom is “real” and “not a bubble.”
Is Amazon a Buy, Hold, or Sell?
On Wall Street, Amazon’s shares currently boast a Strong Buy consensus rating from analysts. This is based on 40 Buys and three Holds issued over the last three months.
At $294.71, the average AMZN price target indicates over 34% upside.
