AWS CPU Shortage Spreads Beyond GPUs as Demand Outpaces Supply

AWS is experiencing internal capacity provisioning delays extending from hours to days, as the company instructs engineers to reduce CPU waste amid a compute shortage that has spread beyond GPUs to CPUs. AI agent and inference workloads are driving surging demand across the cloud stack, with Amazon increasing CPU purchases threefold year-over-year yet unable to meet requirements. Andy Jassy stated the supply imbalance will persist through 2027. The capacity crunch occurs as AWS holds a Q2 contract backlog of $496 billion, with most 2027 capacity already reserved and significant 2028 allocations committed.

Graviton CPU Supply Faces Multi-Year Demand Pressure

Graviton, Amazon's proprietary CPU architecture, has accounted for over half of AWS new CPU capacity for three consecutive years. Two large customers inquired about purchasing the entire 2026 Graviton supply. Amazon's instruction to engineers to reduce CPU waste indicates that new server additions alone cannot resolve the capacity shortage at the current pace.

AWS Contract Backlog Reaches $496 Billion in Q2

AWS reported a Q2 contract backlog of $496 billion, with most 2027 capacity already reserved and substantial 2028 allocations committed. Internal documents describe Bedrock as facing "severe capacity constraints." Some customers reportedly migrated to Google Cloud due to availability issues.

Amazon Raises AI Investment Plans to $220 Billion

Amazon increased its AI-related investment plans to approximately $220 billion. The company's threefold year-over-year increase in CPU purchases has not kept pace with demand growth. Supply availability rather than customer demand is determining growth rates in the current phase.

FAQ

What caused AWS to instruct engineers to reduce CPU waste? AWS internal team capacity provisioning delays extended from hours to days as AI agent and inference workloads drove surging compute demand across the cloud stack, prompting the company to issue waste-reduction directives to engineers.

How long will AWS capacity constraints continue according to Andy Jassy? Andy Jassy stated the supply imbalance will persist through 2027, with AWS holding a Q2 contract backlog of $496 billion and most 2027 capacity already reserved.