Data center project slowdown? Amazon denies, NVIDIA supports: only seeing the increase in AI electricity demand

Amazon and its supplier NVIDIA jointly refuted rumors that tech giants are slowing down or even withdrawing from some artificial intelligence (AI) data center projects.

On Thursday, April 24, at a conference hosted by the Ham Institute for American Energy Research at Oklahoma State University, executives from Amazon and NVIDIA stated that the construction of AI data centers has not slowed down. On the contrary, they have only found that the electricity demand stemming from AI is increasing.

Kevin Miller, Vice President of Global Data Centers at Amazon, stated that there have not been significant changes to Amazon's data center plans. He said:

"In fact, there has not been a significant change. We continue to see very strong demand, and we expect the numbers for demand to only increase in the coming years and long term."

Josh Parker, Senior Director of Corporate Sustainability at NVIDIA, stated that NVIDIA has also not seen any signs of slowdown, saying, "We have not seen any pullback."

After launching the inference model R1 in January, the Chinese AI newcomer DeepSeek quickly gained popularity overseas by the end of the month, providing performance comparable to GPT-4o with only a small portion of computing power, challenging the existing model that relies on expensive GPUs and large data centers to develop top-tier AI models. The rise of DeepSeek has raised concerns among investors that software optimizations like those of DeepSeek could significantly reduce costs, potentially leading to a decrease in demand for AI computing power and electricity.

Parker stated that NVIDIA believes that the demand for computing and energy will only grow due to AI, describing the market's reaction to DeepSeek as "subconscious."

At the same conference, Jack Clark, co-founder of Anthropic, a competitor of OpenAI, stated that by 2027, an additional 50,000 megawatts of power capacity will be needed to support AI. This increment is equivalent to about 50 new nuclear power plants.

Clark said that AI companies like Anthropic expect a significant increase in new baseload power demand, which is the minimum basic power demand that the grid system must meet around the clock, stating, "We are experiencing unprecedented growth."

Microsoft Suspends $1 Billion Data Center Investment Plan in Ohio; Amazon Accused of Pausing Some Leasing Commitments

Before the statements from the aforementioned executives at Amazon and NVIDIA, there were reports in the past few months that both Microsoft and Amazon were slowing down their respective AI data center plans.

In February, TD Cowen analysts released a report indicating that Microsoft had canceled several leasing agreements with multiple private data center operators, involving a total power capacity of hundreds of megawatts. These analysts believe that this move indicates that Microsoft may be facing a "supply surplus" in data centers.

Microsoft later reiterated that its capital expenditures for the current fiscal year will exceed $80 billion, but also acknowledged that "it may strategically adjust the pace or scale of infrastructure in certain areas." Two weeks ago, Microsoft stated that it is "slowing down or pausing" some AI data center projects, including the suspension of the construction of three data center parks with a planned investment of $1 billion in central Ohio, USA. Noelle Walsh, president of Microsoft's cloud computing business, mentioned at the time that while Microsoft may strategically adjust its plans, it will allocate investments based on business priorities and customer needs.

This Monday, Wells Fargo analysts released a report revealing that Amazon has paused negotiations for leasing shared data centers with other companies. Amazon has delayed some commitments regarding new data center leases, primarily in Europe. This has become the latest sign that economic concerns may be affecting technology companies' spending plans.

These analysts noted that Amazon's news is similar to what they recently heard about Microsoft, with both companies scaling back on some new projects but not canceling already signed agreements.

The news from Microsoft and Amazon undoubtedly intensifies concerns about a cooling demand for AI infrastructure. Economists worry that factors such as a potential economic recession could slow the boom in the AI industry, affecting major players including NVIDIA. If Amazon cuts back on new data center investments, it could further harm NVIDIA's chip sales