Why Big Tech is Starting to Scale Back New Data Centre Deals
Amazon Web Services (AWS) has reportedly paused some of its data centre leases, according to Wells Fargo. Specifically, the company has pulled back from its commitments for some colocation facilities, according to analysts.
This is a similar move to Microsoft, with it being reported that the company was stepping back from globally developing data centres.
“We continue to see strong demand for both generative AI (Gen AI) and foundational workloads on AWS. We have almost two decades of experience delivering data centre capacity to meet customer demands, when and where they need it,” Kevin Miller, VP, Global Data Centers at AWS, shared via LinkedIn.
“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.”
AWS and Microsoft lead in data centre development
Amazon has advanced heavily in the global AI infrastructure race, remaining top of the industry. In fact, AWS recently reported a revenue of US$108bn for 2024, which represented a growth of 19% year-over-year, as it looked to continue expanding its AI capabilities.
A central component of Amazon's AI strategy involves custom silicon development, with Jassy positioning the company's Trainium2 chips as a direct alternative to established GPU providers in the data centre industry.
Microsoft, like AWS, remains committed to its ongoing strategy and project developments, but has pulled back from new leases. Having recently celebrated its 50th birthday, the company has doubled its data centre capacity over the last three years, adding more in 2024 than any other year in history.
The company also has plans to spend more than US$80bn to continue building out data centre infrastructure, as demand for its cloud and AI services continues to surge.
“I am extremely proud of the work we are doing in Cloud Operations + Innovation and beyond to enable our customers with our data centre infrastructure – the infrastructure that is the backbone of the Microsoft Cloud and AI,” Noelle Walsh, President, Microsoft Cloud Operations & Innovation, shared on LinkedIn.
“We expect to have another record year in 2025, and our global footprint continues to expand, across 60+ regions and 350+ data centres worldwide. Customer demand for our cloud and AI services continues to increase as reflected by strong growth in revenue and customer commitments in Microsoft Cloud and AI.”
In April 2025, however, a company executive stated that the company was slowing down or temporarily pausing advancing early build-outs.
Both organisations are leaders in their field within cloud infrastructure and in recent years have committed to powerful data centre projects that are designed to advance global connectivity and steam ahead in the pursuit of AI.
So why are these companies pulling back?
AWS and Microsoft have both pumped huge amounts of funding into this area to meet global demand, particularly with regards to Gen AI.
However, recent developments like US tariffs imposed by US President Donald Trump could be to blame for these companies scaling back their acceleration efforts.
The tariffs threaten to disrupt global supply chains for multinational corporations, particularly within technology sectors.
Notably, tariffs on steel and aluminum have been imposed at 25% and 10% respectively, which will likely impact data centre construction and innovation moving forward.
As a result, technology stocks have been under pressure, given the prospect of higher costs and slower economic growth.
According to Reuters, a move like this from AWS could suggest that economic uncertainty is influencing technology firms to reconsider their spending on AI infrastructure, which includes chips.
This move also comes after the rise of DeepSeek, the AI startup that demonstrated its immense speed earlier in the year. Both Amazon and Microsoft have invested heavily in Gen AI, including Microsoft’s hefty financial backing of OpenAI.
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