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At a recent event in New York, Amazon CEO Andy Jassy announced a significant update to Alexa, incorporating advanced artificial intelligence features. This marks the most substantial enhancement of the voice-activated assistant since it debuted over ten years ago.
In a related update, analysts from Wells Fargo reported on Monday that Amazon has postponed certain commitments regarding new data center leases. This development reflects an increasing trend where economic uncertainties are influencing the spending strategies of technology companies.
Just a week prior, a Microsoft executive indicated that the company would be slowing or pausing its expansion efforts on early cloud build-outs. Amazon Web Services (AWS) and Microsoft remain the dominant players in the cloud infrastructure sector, both having ramped up capital investments in response to the surging demand associated with generative artificial intelligence.
Wells Fargo analysts communicated that there have been reports suggesting AWS has put a hold on some leasing negotiations, especially concerning colocation agreements internationally. They noted that this strategy aligns with Microsoft’s recent initiatives, which indicate a cautious approach toward new projects while still honoring existing contracts.
The technology sector has faced headwinds this year, particularly following President Donald Trump’s tariff proposals that have raised concerns about increased import costs for essential equipment, alongside fears of an economic slowdown. Cloud infrastructure firms have aggressively planned to invest hundreds of billions of dollars to secure Nvidia’s graphics processing units (GPUs) and develop new data centers.
This situation has been further complicated by the announcement of tariffs earlier in the month, leading to declines in tech stock values. Microsoft and Amazon are both set to release their quarterly earnings next week, with their stock prices experiencing drops; Amazon’s shares have fallen by 25% for the year, while Microsoft’s have decreased by 15%.
An AWS spokesperson has yet to provide an official statement regarding these developments. Earlier in the month, Jassy assured CNBC’s Andrew Ross Sorkin that he did not foresee any cuts in the company’s data center construction plans.
Currently, Wells Fargo maintains a hold rating on Amazon’s stock, suggesting a cautious outlook.
WATCH: Amazon CEO Andy Jassy’s letter to shareholders: Generative AI will reinvent every customer experience.
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