Wells Fargo analysts reported last Monday, April 21, that Amazon delayed some commitments to lease new data centers, which is the latest sign that economic problems may become an impact factor on technology companies’ spending plans.
It’s worth mentioning that a week ago, a Microsoft executive stated that this technology giant was slowing down or temporarily holding off on advancing early build-outs. Amazon Web Services (AWS) and the mentioned company are currently leading cloud infrastructure providers. In recent quarters, both of these companies have increased their capital expenditures. These decisions were made to meet the demands emerging in the context of the so-called artificial intelligence boom.
Wells Fargo analysts wrote in their note that last weekend they learned from several industry sources that AWS had paused a portion of its leasing discussions on the colocation side. It was underlined that this is especially true for international projects. Analysts of the financial institution also noted that the positioning is similar to the one they heard from Microsoft. In this context, it was underlined that both companies are reeling in several new projects, but are not canceling signed deals.
Shares of technology firms are currently under pressure. This is due to the tariff confrontation. In the current month, the administration of the President of the United States, Donald Trump, imposed sweeping tariffs on goods imported from almost all countries. Some countries have announced countermeasures. Against the background of the new trade reality emerging in the context of the specifics of the circumstances and conditions of the tariff confrontation, the probability of a sharp increase in equipment import costs has increased. Also, within the framework of the mentioned state of affairs, the likelihood of a slowdown in economic growth is more than realistic.
Cloud infrastructure providers announce plans to collectively spend hundreds of billions of dollars securing Nvidia’s graphics processing units and building new data centers.
Microsoft and Amazon will release their quarterly results next week. On Monday, the value of shares of these companies showed a decline. Microsoft securities fell by 15% for the year. The value of Amazon shares decreased by 25% for the year.
It is worth noting that this month, during a conversation with media representatives, Amazon chief executive officer Andy Jassy said that he did not see the company cutting down on data center construction.
Kevin Miller, AWS’ vice president of global data centers, wrote in a LinkedIn post that this is routine capacity management, and there have been no any recent fundamental changes to expansion plans.
As we have reported earlier, Amazon CEO Says AI Costs to Come Down.
