British cloud demand, very much fueled by generative AI needs, far exceeds the capacity of currently available cloud environments, said Gartner VP Analyst Sid Nag. “The UK needs a lot more cloud resources,” Nag said. 

“Amazon has had challenges in the European market related to pricing. It is clear that they are responding to a capacity issue,” Nag said. “They are not spending £8 billion for the fun of it.”

Forrester Principal Analyst Lee Sustar agreed with Nag’s take. 

“AWS’ £8 billion investment in the UK is noteworthy, as AI competition requires expensive buildouts along with the already vast spending needed to sustain hyperscale cloud services. Upstart cloud providers focusing on GPUs for AI are forcing AWS and other big players to pour far more money into infrastructure than they have in the past,” Sustar said. “Although it isn’t clear what percentage of this spending will be devoted to AI capacity, it is reasonable to assume that the AI arms race is a driver here.”

Another analyst, Sean Graham, IDC’s research director for data centers, said the lack of details in AWS’ spending announcement was quite deliberate.

“They are purposely worded that way to give them wiggle room. But even if we don’t know the breakdown, $10 billion is significant,” Graham said. “The average cost to build a datacenter in London is about $10 million/megawatt. If this was all for construction, which it’s not — the breakdown of new build versus maintenance is unclear — that would equate to about to about 1 GW of datacenter capacity, which is on par with their Talen Energy announcement.”