Analysts at Wells Fargo claim that Amazon has put some new data center leases on hold. It may be a sign that economic concerns are prompting tech companies to reevaluate their spending plans.
“Over the weekend, we heard from several industry sources that AWS has paused a portion of its leasing discussions on the colocation side (particularly international ones),” Wells Fargo analysts said in a note on Monday.
They added that “the positioning is similar to what we’ve heard recently from MSFT,” meaning both firms are scaling back some new projects without canceling deals that are already signed.
Tech stocks have also suffered much this year, as former President Donald Trump’s sweeping tariffs have raised import costs for new equipment. The tariff plans have also fueled concerns about a slowdown in economic growth worldwide. In this context, cloud infrastructure providers are racing to acquire Nvidia’s GPUs and spending hundreds of billions of dollars to build new data centers.
In a recent post on LinkedIn, Microsoft’s Cloud Operations President, Noelle Walsh said Microsoft is continuing to expand its datacenter capacity. The company is expecting to spend over $80 billion on datacenter infrastructure based on near-term and long-term demand.
Amazon CEO said the company wouldn’t slow down data center expansion
Both Azure and Amazon Web Services are major cloud infrastructure providers. In recent quarters, they have increased their capital expenditures to meet the rise in generative artificial intelligence. Analysts view these steps as part of a broader pattern of capacity management.
Microsoft and Amazon are set to release their quarterly results next week. On Monday, shares of both companies slipped again, bringing Amazon’s decline for the year to roughly 25 percent and Microsoft’s to about 15 percent.
Earlier in April, Amazon chief executive Andy Jassy told Andrew Ross Sorkin from CNBC that the firm would not be slowing down its data center expansion.
AWS vice president of global data centers Kevin Miller echoed that sentiment in a LinkedIn post, writing, “This is routine capacity management, and there haven’t been any recent fundamental changes in our expansion plans.”
However, the company has not formally canceled any signed leases or purchase agreements as of yet, indicating that core expansion goals remain intact.
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