The two giants slow down the construction of AI data centers: Can the AI boom last?

Recently, Eric Luebchow, an analyst in the communications infrastructure sector of Wells Fargo, said in a report that Amazon has suspended lease negotiations for some data centers of its cloud division, especially in overseas markets, indicating that the leasing of large-scale facilities will slow down in the short term. Previously, Microsoft has also been frequently reported to have cancelled data center leases and other measures to scale back data center construction. Amazon's current move is similar to Microsoft's recent contraction strategy. Although the two tech giants have not yet cancelled the signed agreements, the expansion pace of new projects has clearly slowed down. Both Amazon and Microsoft have slowed down the construction of AI data centers, causing a huge stir in the field of intelligent data. Whether the AI boom can be sustained has become a key topic of concern for global investors and industry insiders.

According to market analysts' analysis, Microsoft's contraction in data center construction is due to the deviation in the current market's estimated growth rate of data storage and computing demand, and Amazon's slowdown in AI data center construction may also be influenced by similar market judgment factors. Moreover, the continuous rise in global economic uncertainty may force Amazon to reconsider how to spend billions of dollars dedicated to artificial intelligence infrastructure, including expensive NVIDIA chips. Insiders in the intelligent computing industry say that the suspension of data center construction indicates that Silicon Valley is also reflecting on whether the extensive AI development model is sustainable in the absence of output.

External policies are one of the reasons why the two tech giants, Amazon and Microsoft, have slowed down the construction of AI data centers. Since the second term of US President Trump, he has held high the tariff stick and introduced a package of tariff policies to "regulate the economy". However, the implementation of Trump's tariff policy has directly led to an increase in the cost of imported equipment. For Amazon, which needs to purchase a large amount of equipment to build data centers, this is bound to increase the construction cost. The increase in costs may make the two tech giants more cautious when expanding their data centers, thereby slowing down their original construction plans.

The potential risk of economic recession and concerns over industry bubbles are hot topics about whether the AI boom can be sustained. Some economists have pointed out that a potential economic recession might slow down the prosperity of artificial intelligence. If the economy falls into recession, the spending of enterprises and consumers will decrease, and the demand for artificial intelligence services will also decline accordingly. Amazon and Microsoft have slowed down their data center plans, possibly to avoid the problems of idle data center resources and high costs during the economic recession. As for concerns over an industry bubble, the chairman of Alibaba Group's board of directors has warned that the construction of AI data centers by American manufacturers may be forming a bubble, and the scale of AI investment by global tech giants amounting to hundreds of billions of dollars is worrying. This concern over an industry bubble may have influenced the decisions of Amazon and Microsoft, making the two tech giants more cautious about the expansion of data centers.

Industry differentiation and internal construction obstacles are another important reason for Microsoft and Amazon to slow down the construction of AI data centers. Based on the recent actual situation, although Microsoft and Amazon may be downsizing their businesses, hyperscale cloud service providers such as Google, Meta, and Oracle remain "active", and NVIDIA's investment activities are still "on the rise". These companies have focused on chips, AI servers and AI data centers, including the infrastructure that supports the companies' AI training, inference computing power systems and cloud computing businesses, in order to strengthen their core businesses such as search. The core business is the fundamental pillar for an enterprise's survival. The core business of a company is the fundamental business distinction between the services it provides and those of other enterprises. According to the principle of marketing segmentation, the focus of core businesses of leading enterprises in the technology industry varies. This might be one of the reasons why cloud service providers such as Google, Meta, and Oracle have different strategies for building AI data centers from Amazon and Microsoft.

Internal construction obstacles should also not be ignored. Some analysts have pointed out that Microsoft may be in a situation of oversupply of data centers. Amazon's internal situation has also faced certain market doubts. As early as October 2024, it was reported that Amazon encountered major challenges in advancing its plan to build an artificial intelligence data center. According to internal documents, Amazon has encountered multiple obstacles such as power supply, water resource management, labor shortages and necessary licenses. These factors jointly pose a severe test to its long-term capacity expansion.

For a long time, Amazon and Microsoft have been the top two tech giants in terms of market share in the global cloud computing field. This time, the two giants have successively slowed down the construction of AI data centers, which inevitably raises concerns in the market. Can the AI boom last? Can AI continue to achieve great success? Perhaps this issue still needs to be refined by the wheel of time before it can be clarified to some extent.