Amazon Joins Microsoft in Scaling Back Ambitious AI Data Center Plans
The second major tech corporation to slow down its AI data center development after Microsoft made the move is Amazon according to Wells Fargo and TD Cowen. The e-commerce company has put on hold its negotiations regarding multiple co-location data center projects which are located in Europe to the same extent as Microsoft did with its current projects.
The scope of Amazon's suspension remains uncertain but Wells Fargo draws parallels between this approach and Microsoft's process of processing recent substantial leasing agreements alongside existing contractual obligations. The high expenses of data center infrastructure get divided between multiple companies through co-location arrangements. The AI data center expansion of competitors Meta and xAI continues without any sign of slowing down.
The current data center power acquisition difficulties may have caused the slow down as Amazon operates 9 gigawatts of existing data center capacity. The market shows declining interest in AI infrastructure because businesses face obstacles when attempting to implement the technology for cost reduction and time efficiency. Amazon faces increasing pressure due to President Trump's trade war which has caused its stock value to drop by 24% this year. The Chinese origin of more than 70% of Amazon's marketplace goods makes the company exposed to growing tariffs.
The trade war together with recessionary threats pose risks to the AI boom because Nvidia depends on China for business and faces sanctions-related scrutiny regarding its high-end chips. The decrease in Amazon data center investments would create additional challenges for Nvidia to sell its chips.
The upcoming May 1, 2025 Amazon earnings release will provide important information about AI market trends. Microsoft ended a $1 billion Ohio data center investment despite local tax incentives because the facility required excessive energy consumption and water usage and failed to create many employment opportunities. Satya Nadella the Microsoft CEO has lowered expectations about AI economic benefits although Microsoft maintains an $80 billion infrastructure investment plan for upcoming years.
The canceled projects will decrease local taxation while creating fewer construction jobs and postponing modernization of outdated infrastructure and renewable energy progress. The elimination of hopes about practical AI data center applications remains because of these spending reductions which also undermine AI projects beyond faulty chatbots and surveillance systems.``
Dominic Maley is an American journalist recognized for his sharp and insightful reporting on social and political issues. His work is known for its depth, integrity, and the ability to highlight critical societal concerns.