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AWS, Microsoft Slow Down Data Center Deployments AWS, Microsoft Slow Down Data Center Deployments

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AWS, Microsoft Slow Down Data Center Deployments – Crypto News

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AWS and Microsoft are pausing or slowing down the signing of leases for data centers, according to a Wells Fargo research note shared with PYMNTS.

Microsoft said it remains on track to spend its 2025 budget of $80 billion or more for data centers but admitted to “slowing or pausing” early-stage projects based on “demand signals.”

AWS said changes it made to its data center plans are part of “routine capacity management.”

AWS and Microsoft are pausing or slowing down the development of data centers, according to a Wells Fargo research note shared with PYMNTS.

Several industry sources told Wells Fargo’s analysts team that AWS has “paused a portion of its leading discussions” on colocated data centers, particularly those abroad.

“It’s not clear the magnitude of the pause, but the positioning is similar to what we’ve heard recently from Microsoft,” wrote Wells Fargo analyst Eric Luebchow in the Monday (April 21) note.

Last week, Noelle Walsh, president of Microsoft Cloud Operations and Innovation, disclosed in a LinkedIn post that the software giant is “slowing or pausing some early-stage projects” as it refines the buildout of cloud capacity relative to customer demand.

Microsoft has doubled its data center capacity in the last three years and is on track to spend the budgeted amount of $80 billion or more in 2025 “informed by near-term and long-term demand signals,” Walsh said in the post. Microsoft has more than 350 data centers in at least 60 regions globally.

Meanwhile, Kevin Miller, vice president of global data centers at AWS, explained in a LinkedIn post that the change in the hyperscaler’s data center plans is “routine capacity management, and there haven’t been any recent fundamental changes in our expansion plans.”

AWS continues to see “strong demand for both generative AI and foundational workloads,” he said in the post.

Wells Fargo’s Luebchow acknowledged that “it’s not clear yet” that AWS’ slowing of lease signing “is an area of concern or just the natural ebbs and flows of hyperscale activity.”

AWS has 114 availability zones and plans for 12 more in 36 global regions that serve 245 countries and territories. An AWS spokesperson told PYMNTS that availability zones refer to a cluster of one or more discrete data centers. AWS does not disclose its actual data center count.

Read also: Nvidia and xAI Sign On to $30 Billion AI Infrastructure Fund

Other Hyperscalers Remain Active

Luebchow said other major data center owners — Meta, Google and Oracle — remain “active” while Nvidia is showing “elevated activity.”

This does not include the $500 billion Stargate project to build artificial intelligence data centers, which is a partnership among OpenAI, SoftBank, Oracle and MGX, plus technical alliances with other companies, the analyst said.

It also does not include Apple’s own data center plans, which are ramping up over the next four years, according to the research note.

The surge in data center construction is the result of explosive growth in AI, cloud services and digital infrastructure needs. The demand for AI tools like ChatGPT is driving a need for massive computing power and storage, which means the necessity for more data centers.

Global data center capacity is expected to grow at 15% per year until 2027, which is forecast to be insufficient to meet growing demand, according to real estate services company JLL.

Driven by AI advancements, “global data center construction currently stands at record levels,” JLL said in its 2025 Global Data Center Outlook. “All signals suggest that AI demand will continue to build momentum in 2025.”

However, the experience of China is a cautionary tale.

After ChatGPT burst onto the scene in November 2022, there was a rush of data center buildout in China as growing demand for AI made the country seem like a sound bet, MIT Technology Review reported in March.

In 2023 and 2024, more than 500 new data center projects were announced in China. At least 150 were operational by the end of last year, per the report.

But the rise of DeepSeek, which offered a more economical way to train and use AI models, along with faltering economics around AI, is putting a crimp on the industry, according to the report.

Many data centers also were constructed hastily and did not meet industry standards. The result is that most of the companies running these data centers are “struggling to stay afloat,” the report said.

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See More In: Amazon Web Services, artificial intelligence, AWS, Big Tech, cloud computing, data centers, GenAI, Google, Innovation, Meta, Microsoft, News, NVIDIA, oracle, PYMNTS News, Technology, wells fargo

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