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Amazon Halts Some Data Center Lease Talks for its Cloud Division
According to Wells Fargo analysts, Amazon.com has put a halt to some data center lease negotiations for its cloud division, especially in foreign markets, indicating a temporary lull in the leasing of major facilities.
Analysts at Wells Fargo noted that while it was unknown how big Amazon's halt was, it was comparable to Microsoft's recent withdrawal.
The analysts stated that Amazon is "digesting aggressive recent lease-up deals," rather than terminating any agreements that have been made.
The two biggest cloud infrastructure providers, Microsoft and Amazon Web Services (AWS), have increased their capital expenditures recently to keep up with the needs of the generative artificial intelligence explosion.
President Donald Trump's plans for broad tariffs have put pressure on IT companies this year, raising the possibility of sharply higher equipment import prices and perhaps slowing the economy.
Cloud infrastructure providers are observed to be making bold announcements about their intentions to pool hundreds of billions of dollars to create new data centers and secure Nvidia's graphics processing units, or GPUs.
This was said to be before this month's tariff announcement. Next Monday, both Amazon and Microsoft are expected to release their quarterly results.
This week’s dip in both stock prices brought Microsoft's year-to-date decline to 15 percent and Amazon's to 25 percent.
The analysts stated that Amazon is "digesting aggressive recent lease-up deals," rather than terminating any agreements that have been made.
Slow payoffs and the emergence of Chinese startup DeepSeek, which demonstrated AI technologies at a significantly lower cost than its Western competitors, have raised investor concern over the significant artificial intelligence spending by US tech companies.
Also Read: AI Is Redefining The Future Of Healthcare From Diagnosis To Treatment
Similar to its competitors, Amazon is making significant investments in generative AI, launching a range of chatbots to assist customers, enterprises, and sellers.
Earlier this month, CEO Andy Jassy defended the company's billion-dollar investments in AI development by claiming that they were required to stay competitive.
