Amazon Web Services (AWS), the cloud division of Amazon, has reportedly paused some of its talks about leasing data centers, especially in foreign markets. According to analysts from Wells Fargo, this might show a short-term slowdown in building large-scale cloud infrastructure.
Why Is Amazon Slowing Down?
Experts believe the growing uncertainty in the global economy could be making big companies more cautious about spending on artificial intelligence (AI) tools, especially expensive hardware like Nvidia chips. Amazon’s move reflects a broader trend among top tech firms.
Not Canceled, Just Taking a Breather
Wells Fargo analysts explained that Amazon hasn’t canceled any signed deals. Instead, the company is “digesting” or taking time to manage a large number of recent agreements. This means Amazon may be reviewing and managing what it already committed to before moving forward with more leases.
Big Cloud Companies Becoming More Selective
According to the analysts, major cloud companies, also known as hyperscalers, are now more careful when it comes to leasing large spaces with massive power requirements. They’re also tightening the schedule for pre-leasing data centers that were supposed to be ready by 2026.
Other Tech Giants Still Active in the Market
While Amazon seems to be slowing down, other companies like Meta, Google (owned by Alphabet), and Oracle are still active in signing new data center deals. This shows that while some firms are cautious, others are continuing their expansion plans.
Amazon Says It’s Just Normal Planning
In response to the report, Kevin Miller, Vice President of AWS Global Data Centers, shared on LinkedIn that there’s no major change. He called it “routine capacity management” and said Amazon’s expansion plans remain the same.
Microsoft Has Also Stepped Back
Microsoft, another top cloud provider, has pulled back from projects that would have used 2 gigawatts of power in the U.S. and Europe. Analysts from TD Cowen mentioned this move in March, saying Microsoft had too much supply compared to its current demand expectations.
Rising Concerns About AI Spending
Investors are becoming more skeptical about the huge amounts of money tech companies are spending on AI. The results from these investments have been slow, and cheaper AI models—like those from Chinese startup DeepSeek—are gaining attention for their lower costs.
Amazon Still Betting Big on AI
Even with the pause in data center leasing, Amazon continues to invest heavily in generative AI. The company has released several AI chatbots for use by sellers, businesses, and everyday consumers.
CEO Andy Jassy Defends AI Investment
Earlier this month, Amazon CEO Andy Jassy said that spending billions on AI development is necessary. He believes this investment is key to staying ahead of competitors in the fast-growing AI space.
