First Microsoft, now AWS: Tech giants are hitting the breaks on costly data center plans
Amazon Web Services (AWS) has paused plans for some data center leases, according to analysts, sparking further concerns about the cost of AI infrastructure spending plans.
According to reports from Reuters, Wells Fargo analysts spotted that AWS had paused discussions over data center leases in overseas markets specifically. It wasn’t clear, the analysts said, exactly how much capacity was being reconsidered.
The AWS report follows similar moves by Microsoft, which were seen by analysts as a sign of weaker than expected demand for AI or a reconsideration of the costs — perhaps no surprise given the recent turmoil in the tech industry sparked by US tariffs.
Amazon and Microsoft have both pledged to significantly increase their spending on data centers amid the AI boom, with AWS saying it would spend $83 billion and Microsoft $80bn this year alone.
The latter has stressed that investment isn’t being cut back despite data center lease changes.
AWS is letting data center plans simmer
Wells Fargo analysts said the AWS rollback was similar to Microsoft’s own aren’t outright cancellations at this stage. Instead, the company appears to be “digesting aggressive recent lease-up deals”.
“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 reportedly said in its client note.
“It does appear like the hyperscalers are being more discerning with leasing large clusters of power, and tightening up pre-lease windows for capacity that [would] be delivered before the end of 2026.”
Analysts noted that Meta, Google, and Oracle all remain active in data center leasing.
Meta, for example, has pledged to spend $65 billion in data center investment this year alone while Google recently reiterated its plans to shell out $75 billion on such infrastructure.
Similarly, Oracle is helping with Project Stargate, a government-backed $500 billion project to build more data center infrastructure in the US over the next five years.
Amazon is still bullish on AI demand
When approached for comment on the reports, an AWS spokesperson pointed ITPro to a recent LinkedIn post by Kevin Miller, AWS vice president for global data centers.
Miller said the tech giant still intends to charge ahead with infrastructure expansion plans and that the company continues to see “strong demand” for generative AI and foundational workloads.
That said, Miller noted there were indeed changes in data center plans but stressed this move represents “routine capacity management”.
“There haven’t been any recent fundamental changes in our expansion plans,” he said.
“We have almost two decades of experience delivering data center capacity to meet customer demands, when and where they need it.
“That experience has taught us to consider multiple solutions in parallel. Some options might end up costing too much, while others might not deliver when we need the capacity. Other times, we find that we need more capacity in one location and less in another.”
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