Why Are Amazon's AI Chips Sitting in Warehouses?

Ed Elson says Business Insider reporting shows Amazon spending billions of dollars a month on NVIDIA server racks and GPUs it cannot immediately install, so a lot of the racks are sitting in warehouses waiting to be used. He calls the warehouse a concrete sign that the hyperscalers maybe did overbuy, because the chips were supposed to be generating cash today.

Since September, eight data center listings have been pulled, postponed, or repriced. Firmus canceled an IPO. SP Energy delayed an IPO. Elise, another data center company, went public and the stock fell more than 30% on day one. Ed Elson says credit markets are souring on AI. Credit default swap spreads are exploding and hitting record highs on names like Oracle, NVIDIA spreads are rising, and CoreWeave is hitting record highs. Ramp data shows corporate token spending is slowing down.

Ed Elson calls the Elise drop a warning for what happens when AI data center companies go public. He says they do not do very well, and he groups the idle Amazon chips with the weak listings and the wider credit stress.