Amazon Web Services (AWS) has reportedly delayed several new data center leases.
Analysts at Wells Fargo said that the company has pulled back from its commitments for some colocation facilities, following similar moves at Microsoft.
“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 wrote in a note first reported by NBC News.
The note added that “the positioning is similar to what we’ve heard recently from Microsoft,” in that both companies are paring back some new projects but not canceling signed deals.
In February, TD Cowen analysts reported that Microsoft had walked away from 200MW of data center developments and leases. The next month, that was increased to 2GW.
"In recent years, demand for our cloud and AI services grew more than we could have ever anticipated, and to meet this opportunity, we began executing the largest and most ambitious infrastructure scaling project in our history," Microsoft's president of cloud operations said in a LinkedIn post to clarify the reports.
"By nature, any significant new endeavor at this size and scale requires agility and refinement as we learn and grow with our customers. What this means is that we are slowing or pausing some early-stage projects. While we may strategically pace our plans, we will continue to grow strongly and allocate investments that stay aligned with business priorities and customer demand."
This year saw Microsoft lose its position as OpenAI's exclusive cloud provider following the $500bn Stargate data center initiative announced by the AI company. While it retains "right of first refusal" on new capacity, it expects to build less for OpenAI than originally expected.
Microsoft said it still plans to spend around $80 billion on data center capex this year, despite the pullback. Some of its leases were picked up by Google and Meta.
Both AWS and Microsoft's reported lease delays come as tariffs and a troubled global economic outlook risk disrupting the AI data center building boom.
Update: Kevin Miller, VP of data centers at AWS, downplayed the pullback in a LinkedIn post: "First and foremost, we continue to see strong demand for both Generative AI and foundational workloads on AWS. 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.
"This is routine capacity management, and there haven’t been any recent fundamental changes in our expansion plans. Fortunately for our customers, they’re able to focus on their business and leave these details to us."
