Amazon.com (NASDAQ: AMZN) has temporarily halted some discussions about leasing data center capacity for its Web Services division, according to a note from Wells Fargo released on Monday. The move highlights a slowdown in demand from major artificial intelligence (AI) users.
Wells Fargo reported that Amazon Web Services (AWS) has paused some data center leasing, especially in international markets, though the extent of this pause remains unclear.
This development follows a similar announcement by Microsoft, another major AI investor, which revealed it was slowing its data center expansion. The pause from both companies has raised concerns about a possible oversupply in the AI sector.
Wells Fargo pointed out that AWS and Microsoft are the two largest “hyperscalers” in the AI market, and the recent trend suggests a cooling in data center demand.
However, analysts noted that it is unclear whether AWS’s reduced leasing is a sign of a deeper issue or simply a normal fluctuation in hyperscale activity.
Despite the slowdown from AWS and Microsoft, other large hyperscalers like Meta (NASDAQ: META), Google (NASDAQ: GOOGL), and Oracle continue to invest in data centers. Additionally, plans for significant data center expansions by OpenAI and Softbank’s Project Stargate are still in motion.
Any reduction in server investments by AI hyperscalers could signal weaker demand for AI chips and server components from companies like Nvidia (NASDAQ: NVDA).
Earlier this year, Amazon had indicated that it could invest over $100 billion in AI infrastructure by 2025.
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