AWS and Microsoft are pausing or slowing down the development of data centers, according to a Wells Fargo research note. Several industry sources told Wells Fargo’s analysts team that AWS has “paused a portion of its leading discussions” on colocated data centers.
Microsoft capex for the quarter came in at $21.4bn this was $1.2 billion less than the previous quarter. This is the first quarterly decline in capex at the company for more than two years, and comes after reports that Microsoft was stepping away from data center projects.
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. Microsoft has more than 350 data centers in at least 60 regions globally.
There has been a focus on Microsoft having “2GW of lease cancellations” but this only covers non-binding LOIs, not firm contracts. Microsoft has ~5GW of pre-leased capacity under binding contracts that will start operations between 2025 and 2028. In reality, Microsoft walked away from significantly more than 2GW of non-binding contracts over the last 2 quarters. The firm was in discussion with virtually every single vendor for capacity in mid-2024 and has since completely frozen new leasing activity.
Semianalysis shows the estimated leased data center activity.
Microsoft has significantly ramped up its self-build efforts. They have acquiring tens of thousands of acres around the US and the globe, accelerating construction of existing sites and securing gigawatts of power for future sites .
Despite a 1.5GW self-build pause and a freezing of all new leasing activity, there is still a lot of Microsoft data center activity for equipment suppliers like Vertiv.
In April, 2025 Vertiv Holdings Co (NYSE: VRT), a global provider of critical digital infrastructure and continuity solutions, reported financial results for its first quarter ended March 31, 2025. Vertiv reported first quarter 2025 net sales of $2,036 million, an increase of $397 million, or 24%, compared to first quarter 2024. Organic orders growth remained strong with TTM orders up ~20% compared to the TTM period ended March 2024, demonstrating continued robust market demand. First quarter orders increased ~13% compared to the first quarter 2024 and increased ~21% sequentially from the fourth quarter 2024. First quarter 2025 book-to-bill ratio was ~1.4x and backlog increased to $7.9 billion, growing ~10% from the end of fourth quarter 2024.
Vertiv sales by region.
AWS continues to see strong demand for both generative AI and foundational workloads. 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.
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. It also does not include Apple’s own data center plans, which are ramping up over the next four years.
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.
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
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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