Amazon Web Services (AWS) is reassessing several of its international colocation partnerships, according to a Wells Fargo analyst note cited by CNBC. While specific projects were not disclosed, the note indicates that AWS is delaying, rather than canceling, many of these data center builds, with international sites appearing most affected.
The move reflects a broader recalibration underway in the hyperscale cloud sector, where infrastructure demand is surging due to AI workloads and enterprise cloud adoption, but execution is increasingly hampered by material shortages and grid limitations.
In the first half of 2024 alone, AWS committed over $50 billion to U.S.-based infrastructure and launched new cloud regions in Taiwan, Japan, and Singapore. Yet supply chain bottlenecks – ranging from semiconductor shortages to insufficient power capacity and delays in critical components like motherboards – have disrupted its global momentum. Amazon CEO Andy Jassy highlighted these issues in February, while AWS’s EMEA infrastructure policy director later flagged aging electrical grids as an added obstacle for new deployments in Europe.
Analysts at Wells Fargo suggest that AWS may be using these constraints as a strategic lever to defer selected projects, echoing similar decisions by Microsoft. In recent months, Microsoft scrapped or delayed up to 2GW of data center projects across the U.S. and Europe. In a LinkedIn post, Microsoft’s President of Cloud Operations, Noelle Walsh, explained that while demand had surpassed expectations, the company was entering a phase of “agility and refinement” to align future infrastructure with business priorities.
“In recent years, demand for our cloud and AI services grew more than we could have ever anticipated, and to meet this opportunity, we began executing the largest and most ambitious infrastructure scaling project in our history,” Walsh wrote. “By nature, any significant new endeavour at this size and scale requires agility and refinement as we learn and grow with our customers. While we may strategically pace our plans, we will continue to grow strongly and allocate investments that stay aligned with business priorities and customer demand,” she noted.
These developments raise a broader question: Are we seeing the early signs of a global recalibration – perhaps even a temporary pullback – within the hyperscale and AI infrastructure ecosystem? With capital-intensive expansions now facing growing scrutiny, the recent delays by AWS and Microsoft may indicate that cloud giants are becoming more measured in their pursuit of AI-driven capacity, particularly as fears of data center oversupply and regional power constraints intensify. The next few quarters may reveal whether these are isolated tactical pauses or signals of a maturing phase in the hyperscale growth story.
