Amazon is stockpiling billions of dollars worth of Nvidia AI server chips in warehouses, even though many data center sites lack the electrical capacity to power them. The company uses an Early Rack Receipt program that takes ownership of hardware before facilities are ready. Amazon expects to receive $5 billion in Nvidia AI server systems in August, followed by roughly $3 billion per month. AWS CFO John Felton acknowledged that the AI push has turned Amazon's free cash flow negative, and the company expects this situation to persist for a couple of years.
Amazon raised its 2026 capital spending plan to about $220 billion, a figure that reflects the scale of its AI infrastructure buildout. Morgan Stanley named Amazon a top pick and lifted its price target to $350, citing AWS revenue growth of 37% in the second quarter, which beat analyst expectations of 31%. Tesla, by contrast, is pulling back. The company plans to cut capital spending to about $20 billion in 2026, down from an earlier forecast of over $25 billion, and will end production of Model S and Model X to redirect focus toward humanoid robots and AI.
In China, Huawei is narrowing the gap with Nvidia through a close partnership with AI start-up DeepSeek. DeepSeek has been testing Huawei's Ascend 950PR chips while releasing new software tools. Research firm SemiAnalysis says the collaboration signals that domestic innovation in China is accelerating and that the competitive landscape for AI chip hardware and software is shifting. Meanwhile, Marvell Technology is positioning itself as a strong AI semiconductor pick, designing supporting chips like custom accelerators, optical links, and memory controllers used by AI labs and hyperscalers. The company recently showcased its second-generation Structera X memory expanders at the Open Compute Project Global Summit in San Jose.
Goldman Sachs warns that AI could eventually displace up to 9% of U.S. workers, or about one in 11 people. The bank assumes AI will boost productivity by 15% in developed economies, but the biggest job losses are expected during economic recessions rather than healthy periods. Historical data shows automation-related layoffs spike during downturns like those of the 1980s, 2001, 2008, and 2020. In Southeast Asia, generative AI has spread rapidly, with about 243 million users, equal to 58% of the working population. Companies are finding profits through e-commerce and customer service rather than subscriptions, with Shopee handling about 80% of customer queries via AI chatbots and cutting costs by 30%.
On the government front, Oklahoma and Virginia received a $1.1 million grant to study how AI could reshape state jobs. The 18-month project, called Designing the AI-Ready Government Workforce, will create VOKA, an open-source tool to compare state job classifications against emerging workforce skills. Two NYC-based companies received the grant from the U.S. Department of Labor to develop an AI-powered human resources system in state agencies, aiming to reduce administrative burdens and improve employee engagement. A report by Ankura Consulting Group adds that organizations with strong digital and AI skills outperform peers in revenue, profit, and productivity, but technology investment alone does not guarantee success. Companies need trusted data, modern foundations, and redesigned workflows to see real results.
Key Takeaways
- Amazon expects to spend about $220 billion on capital expenditures in 2025 and has raised its 2026 plan to the same level, while free cash flow turns negative due to AI infrastructure buildout.
- Amazon is storing $5 billion in Nvidia AI server systems due in August, with roughly $3 billion arriving per month, at sites that lack sufficient power to run them.
- Tesla plans to cut capital spending to about $20 billion in 2026, down from over $25 billion, and will end Model S and Model X production to focus on AI and humanoid robots.
- Huawei and DeepSeek are partnering to close the AI chip gap with Nvidia, with DeepSeek testing Huawei's Ascend 950PR chips and releasing new software tools.
- Goldman Sachs estimates AI could displace up to 9% of U.S. workers, or about one in 11 people, with the biggest losses occurring during recessions.
- Southeast Asia has 243 million generative AI users, equal to 58% of the working population, while only 1% to 2% pay for personal AI subscriptions.
- Shopee handles about 80% of customer queries with AI chatbots, reducing costs by 30% as the region's digital economy targets over $1 trillion by 2035.
- Oklahoma and Virginia received a $1.1 million grant to deploy AI in state agencies' human resources, with an 18-month timeline to build the VOKA open-source tool.
- Marvell Technology designs supporting AI chips like custom accelerators and memory controllers, recently unveiling its second-generation Structera X expanders at the Open Compute Project summit.
- A report by Ankura Consulting Group says companies need trusted data, modern technology foundations, and redesigned workflows to convert AI spending into measurable financial performance.
Amazon warehouses billions in Nvidia AI chips it cannot yet power up
Amazon is storing billions of dollars in Nvidia AI server chips before its data centers have enough electricity to run them. The company uses an Early Rack Receipt program that takes ownership of racks before facilities are ready. AWS CFO John Felton acknowledged the AI expansion has made Amazon free-cash-flow negative. Amazon expects to spend about $220 billion on capital expenditures this year and believes the situation will persist for a couple of years.
Amazon's Nvidia chips sit unpowered as AI spending soars
Amazon expected to receive $5 billion worth of Nvidia AI server systems in August, followed by roughly $3 billion per month. Some data center sites have physical space for racks but lack sufficient power to run them. At a September meeting, Felton joked to infrastructure chief Prasad Kalyanaraman about taking the company free cash flow negative. Amazon disputed claims, calling hardware staging near deployment sites a best business practice.
Jim Cramer and Ken Fisher's top AI stock pick ahead of earnings
Amazon rose after Morgan Stanley named it a top pick and raised its price target to $350. AWS revenue grew 37% in the second quarter, beating analyst expectations of 31%. Amazon raised its 2026 capital spending plan to about $220 billion, and free cash flow turned negative. The company is scheduled to report third-quarter earnings on October 29.
$1.1M grant targets AI skills gap in state government
Oklahoma and Virginia received a $1.1 million grant to study how AI could change government jobs. The 18-month project called Designing the AI-Ready Government Workforce will be supported by the Public Benefit Innovation Fund. The partners plan to create VOKA, an open-source tool to compare state job classifications against emerging workforce skills. Holly and 17A were chosen from over 300 applicants for the fund's 2026 spring cohort.
Oklahoma to deploy AI in state agencies human resources
Two NYC-based companies received a $1.1 million grant from the U.S. Department of Labor to develop an AI-ready government workforce in Oklahoma and Virginia. The grant will fund an AI-powered human resources system in state agencies to streamline HR processes and improve data-driven decision-making. The project is expected to be completed within 18 months. The deployment aims to reduce administrative burdens and improve employee engagement.
Southeast Asia embraces AI with rapid growth and new business models
Southeast Asia has about 243 million generative AI users, equal to 58% of the working population, in less than three years. Only 1% to 2% of people pay for personal AI subscriptions, so companies are finding other ways to profit through e-commerce, advertising and customer service. Shopee handles about 80% of customer queries with AI chatbots, cutting costs by 30%. The region's digital economy is expected to reach $368 billion this year and over $1 trillion by 2035.
Huawei and DeepSeek narrow the AI chip gap with Nvidia
Huawei is closing the technological gap with Nvidia by working closely with AI start-up DeepSeek. DeepSeek has been testing Huawei's Ascend 950PR chips while releasing new software tools. Research firm SemiAnalysis says this growing partnership shows domestic innovation in China is accelerating. The report suggests the competitive landscape for AI chip hardware and software is shifting.
SOF_B reports nine-month growth despite softer Q3 results
SOF_B saw nine-month revenue grow 9.3% and EBIT rise 13.6%, but Q3 revenue and EBIT declined due to lower subcontractor volumes. The company is investing in AI development and preparing for the TANON launch to drive future growth. SOF_B also continues to focus on cost control and building recurring revenue streams.
AI race intensifies as investment capital becomes scarce
The AI sector is deepening its competitive race while access to capital is shrinking. CNBC's Investment Committee discussed how this capital scarcity is affecting investment strategies in artificial intelligence. The debate focused on how investors should respond to these growing financial constraints. The discussion highlights a pivotal moment for AI funding and development.
Tesla cuts AI and robotics spending ahead of possible SpaceX deal
Tesla plans to reduce capital spending to about $20 billion in 2026, down from an earlier forecast of over $25 billion. CEO Elon Musk also announced the company will end production of Model S and Model X while shifting focus to humanoid robots and AI. The spending cuts come as Musk explores a merger between Tesla and SpaceX. Tesla reported free cash flow of $1.53 billion in Q3, beating expectations despite lower revenue growth.
Goldman Sachs warns AI could displace one in 11 workers
Goldman Sachs economist Joseph Briggs says AI could eventually displace up to 9% of U.S. workers, or about one in 11 people. The bank assumes AI will boost productivity by 15% in developed economies. However, the biggest job losses are expected during economic recessions, not during healthy times. Historical data shows automation-related layoffs spike during downturns like the recessions of the 1980s, 2001, 2008, and 2020.
Marvell Technology stands out as a top AI chip stock
Marvell Technology is recommended as a strong AI semiconductor stock to own before 2027. Unlike GPU companies, Marvell designs supporting chips like custom accelerators, optical links, and memory controllers used by AI labs and hyperscalers. The company showcased these products at the Open Compute Project Global Summit in San Jose from October 12 to 15. At the event, Marvell introduced the second generation of its Structera X memory expanders.
Digital and AI leaders outperform less mature companies
A report by Ankura Consulting Group says organizations with strong digital and AI skills perform better in revenue, profit, and productivity. The research shows that technology investment alone does not guarantee success. Companies need trusted data, modern technology foundations, and redesigned workflows to see real results. The report introduces a Digital Capabilities Model to help businesses convert technology spending into measurable financial performance.
Sources
- Amazon Is Warehousing Billions in Nvidia AI Chips It Cannot Yet Power Up
- Amazon's Nvidia Chips Are Sitting in Warehouses Without Power as AI Spending Soars, Business Insider Reports
- Should You Buy Jim Cramer and Ken Fisher’s Top AI Stock Pick Ahead of Earnings?
- $1.1M Grant Targets AI Skills Gap in State Government
- Oklahoma to deploy AI in state agencies’ human resources over next 18 months
- Southeast Asia is hungry for AI — and the money isn't just in subscriptions
- ‘Jensen’s nightmare’: Huawei, DeepSeek narrow AI chip ecosystem gap with Nvidia
- SOF_B: Nine-month growth offset a softer Q3 as AI investment and TANON shape the next growth phase
- The AI race deepens as access to capital shrinks: Your next move
- Tesla cuts AI, robotics spending plans ahead of potential SpaceX deal
- AI could displace one in 11 workers, Goldman says, but the layoffs are likely waiting for a recession
- If I Could Only Buy 1 Artificial Intelligence (AI) Semiconductor Stock to Buy Before 2027, It Would Be This One
- Digital And AI Leaders Perform Better: How Connected Capabilities Convert Technology Investment Into Financial Performance
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