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AWS joins Microsoft in pausing data center projects – is AI demand falling off?

April 23, 2025
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  • AWS believed to be pausing future colocation lease negotiations
  • Microsoft has also shelved a $1 billion Ohio project
  • AWS VP said GenAI demand is still strong

Amazon Web Services (AWS) is reportedly reassessing some colocation lease negotiations, especially internationally, amid ongoing cost concerns.

Although the company looks to be pausing some future discussions, it appears that Amazon will not be backing out of any signed agreements, with confirmed projects set to continue.

However, it’s certainly a sign of the times, with Microsoft also recently confirming that it would be pausing a $1 billion project for a data center campus in Ohio.

AWS is also pausing some data center plans

Kevin Miller, AWS VP for Global Data Centers, confirmed in a LinkedIn post that the change was not indicative of reduced interest in artificial intelligence, but rather a shift in focus amid rising costs.

“First and foremost, we continue to see strong demand for both Generative AI and foundational workloads on AWS,” Miller explained. “This is routine capacity management, and there haven’t been any recent fundamental changes in our expansion plans.”

Billions have been knocked out of the stock market in recent weeks, with Trump’s tariffs playing a hefty role in economic fluctuations.

Companies like Amazon and Microsoft have had to reassess their strategies, particularly abroad where currency conversions may no longer be as favorable, but it looks like plans are just being put on hold until economies become more stable rather than being scrapped altogether.

In the case of AWS, changes to its colocation strategy don’t reflect the full story, because the company might also be shifting more compute in-house – more of a shift than an overall reduction, then.

Reiterating the company’s commitment to expanding its data center operations globally, Miller’s LinkedIn feed is full of shared announcements, icnlduing an $8.3 billion commitment in Maharashtra, India; the launch of a new AWS Region in Asia Pacific (Thailand); an $11 billion investment into Georgia and $10 billion in funding for infrastructure in Ohio.

Via The Register

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