Amazon says it is now installing an AI chip roughly every fourteen seconds. Its free cash flow over the past year just came in at negative 42.4 billion dollars. Those two facts are related, in case anyone was wondering. Welcome to The Data Center Daily. It's Friday, October 30th. Amazon closes out the hyperscaler earnings round, and Microsoft heads to the bond market. PJM refiles its reliability backstop with a March bidding window. Two buyer groups whose members include Amazon, Google, Meta and Microsoft endorse a Senate bill that would charge big loads twice for the grid. And ERCOT files its first full defense of a Batch Zero ruling.
The New York Times, in a piece carried by DNYUZ, on the quarter now in the books:
Four of the tech industry’s biggest companies set a spending record in the last quarter as they raced to build artificial intelligence, leading to a worrisome new milestone: Most of them are spending more cash on data centers than they get from running their businesses.
Amazon reported Thursday. Capex passed 75 billion dollars for the quarter, more than double a year earlier, and trailing free cash flow sat at negative 42.4 billion, which Amazon said primarily reflected AI investment. And AWS is why they can stomach it. Sales up 39 percent to 46 billion, its fastest growth in almost five years per the Times, and Jassy told investors he expects better than 40 percent a year through 2028. Plus his line of the week: almost as fast as they install capacity, customers are gobbling it up. You wanted to know whether his roughly 220 billion for 2026 would move. The Times doesn't give an updated full-year number for Amazon. It does give the group total: Amazon, Microsoft, Google and Meta on track for more than 720 billion dollars of capex this year, about triple two years ago, with more expected next year. And by the Times' count, free cash flow is negative at every one of them except Microsoft. Google's stock was down more than 12 percent by Thursday's close, erasing its gains for the year. Amazon slipped about 5 percent after hours. The market has stopped grading on capacity and started grading on cash. Microsoft is the odd one. Capex grew 30 percent to 45.2 billion, under the roughly 50 billion it had guided, partly because some suppliers were running behind schedule. Azure grew 48 percent anyway. Then on Thursday it said it would raise 25 billion dollars with its first new bonds in almost a decade. So the one company still throwing off cash is also borrowing. When the cleanest balance sheet in the group walks over to the bond desk, nobody is self-funding this anymore. Fair on direction, though Microsoft says free cash flow stays positive at least through next summer. Meanwhile Alphabet signaled more than a trillion dollars in future lease and other commitments. As David Tsui of S&P Global Ratings put it, a lot of the return is years down the road.
Jonas Muthoni, writing in Microgrid Media:
Under PJM’s revised approach, the allocation of backstop charges would be tied to firm large-load growth between actual summer 2026 peak demand and the forecast for the 2028–2029 delivery year.
PJM made the filing at FERC on Thursday, October 29th, as it had said it would. It's the one-time buy against a 6,831 megawatt shortfall for 2028 to 2029 that FERC suspended on September 29th. Bidding would open March 1st, 2027, with results May 10th. And the cost allocation held up. Utilities report qualifying large-load demand, and charges land on zones in proportion to how much of that growth they brought. You bring the data centers, you buy the capacity. Muthoni adds a caveat: that's zone-level, not any one data center's bill. And the target will be recalculated net of bilateral supply contracts, so the final buy could be smaller. The piece I like is the exit clause. A load-serving entity that leaves PJM stays on the hook for its backstop charges through the commitment term, and commitments can run up to 15 years. Nobody gets to sign up for the capacity and then walk. Also in the filing: a lower uniform credit rate on collateral, an end to an earlier exemption for certain municipal utilities and co-ops, and a price ceiling that stays at a megawatt-weighted average of 555 dollars per megawatt-day. Somewhere a gas developer just reopened a spreadsheet. None of it is approved. FERC still has to rule, and March bidding is a proposal, not a schedule.
Catherine Boudreau, writing in Latitude Media:
BAAJA would require the Federal Energy Regulatory Commission to rewrite a 1994 policy that allowed electricity customers to pay either the “embedded” costs of the existing grid, or the “incremental” cost of its expansion — not both. Instead, computational loads larger than 20 megawatts would be forced to pay both.
BAAJA is the Bipartisan American Affordability and Jobs Act, the Senate permitting bill. Latitude reports that two groups representing companies including Amazon, Google, Meta and Microsoft have endorsed it: the Corporate Energy Buyers Association and the Electricity Customer Alliance. The Data Center Coalition has not; it says it's still reviewing the bill with members. Read the rest of that section, because it goes past paying twice. States could add a surplus charge to lower everyone else's bills, and treat data centers as a less favorable class than other big industrial loads. And utilities would have to hold data centers liable for capital costs even if they exit early, for any reason. That's the stranded-asset question, answered in statute. ECA's Jeff Dennis says developers have already said they'll cover their costs and then some, that they're willing to pay more than their own costs so other customers are treated fairly. He also warns that costs pushed too high will drive projects off-grid. That's the tell. We'll pay double, but charge us too much and we build our own plant. I read the endorsement as an opening position. CEBA's Nidhi Thakar says the real detail lands in a FERC rulemaking on transmission cost allocation. Negotiators are working on a managers' amendment, and a Senate aide told Latitude it's unclear whether that touches the ratepayer section. And the vote is set for Monday, November 9th, the week after the midterms, with half of Americans now opposed to a data center within three miles of home, per POLITICO polling Latitude cites.
Power Grab Texas, in its Thursday morning briefing:
It says Medina County Power NR I "has not satisfied the requirement to have a qualifying study to be classified as Base Load" and asks the commission to "deny the requested relief and dismiss the Complaint with prejudice."
Yesterday we counted five Batch Zero appeals at the Texas PUC. This is ERCOT's first full answer to one of them, filed Wednesday at 3:33 in the afternoon in Docket 60356. Medina's co-op utility left three affected large loads out of its study. ERCOT says that makes the study incomplete, so Medina went to studied load, and that validity is ERCOT's call alone. Same fact pattern as Skybox. The utility's study misses the neighbors, and the developer pays for it. ERCOT's position boils down to: your utility's diligence isn't our problem. If that holds for Medina, the other complaints just got a lot harder. The footnote may matter more. ERCOT warns that every classification so far is conditional. Under the review running from Abbott's September 3rd directive, a project marked base load can still drop to studied load if it fails on site control, a notice to proceed on interconnection facilities, or ordering long-lead equipment on time. So even a base-load win is provisional. And Medina isn't going quietly: that night it appealed the October 27th order pausing its case, saying delay costs it its only real shot at base load. Same briefing, per Bloomberg: banks have shelved a planned bond sale against a roughly 15 billion dollar loan for the Nexus campus near Waco that Anthropic leases, citing Texas's freeze. So the Texas pause now has a line item on Wall Street.
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This weekend I'm digging Amazon's full-year capex out of the filing, and counting how many more Batch Zero complaints land before the PUC's November 5th meeting. Our next episode is Monday, November 2nd. This has been The Data Center Daily, from Lantern Podcasts. Enjoy the weekend.