Amazon becomes the latest big tech company to cut back on AI spending — or not

Published Mon, Apr 21 20252:34 PM EDT

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market update: Stocks are under pressure as worries of a tariff-induced economic slowdown weigh on the market. Investors were disappointed by the absence of any encouraging trade developments over the long holiday weekend, while tensions between the U.S. and China remain elevated. President Donald Trump's ongoing criticism of Fed Chair Jay Powell has further unsettled the market. AI spending slowdown?: A research note from Wells Fargo on Monday suggested that Amazon could become the second major hyperscaler to scale back its AI infrastructure expansion. Citing industry sources, Wells Fargo reported that Amazon has put a hold on some of its colocation data center leasing discussions. Colocation data centers involve renting space for servers and computing hardware rather than relying on in-house or private facilities. If true, Amazon joins Microsoft , which is also reportedly slowing or digesting its recent AI investments. Meanwhile, Meta , Alphabet , and Oracle remain "active" in their AI infrastructure efforts, according to the note. But a similar industry note by analysts at Cowen added some context around Amazon's reported plans. Cowen was aligned with Wells Fargo in that Amazon has walked away from some colocation deals but they say it's related to Amazon shifting its preference for self owned and powered shell data centers, which offer more control, customization, and efficiencies. "Our checks point to Amazon's desire to drive greater efficiency across its data center fleet," the analysts wrote, adding: "We do not view this dynamic as materially negative for the market given colocation capacity represented a minority of Amazon's overall capacity procurement, as Amazon continues to move ahead with powered shells and self-builds." Cowen also pointed out that Meta, Alphabet, and Oracle remain active in securing new capacity and reiterated Microsoft is in "digestion mode." There's a mix of headlines right now about AI spending — some suggesting companies are reacting to a slowdown in demand, while others see it as a natural pause following an intense wave of investment. Fortunately, we'll get a clearer picture over the next two weeks when the big hyperscalers (Amazon, Alphabet, Microsoft, Meta Platforms) report earnings and provide an update to their capital expenditure plans. Up next: The regional bank Zions Bancorp reports after the closing bell on Monday. Tuesday is a big earnings day, with Club stock Danaher scheduled to report along with GE , Verizon , Northrop Grumman , RTX , Lockheed Martin , Elevance Health , Quest Diagnostics , Kimberly-Clark , and several others. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Andy Jassy, chief executive officer of Amazon.com Inc., speaks during an unveiling event in New York, US, on Wednesday, Feb. 26, 2025. Jassy said Amazon is in the process of building over 100 generative artificial intelligence (AI) features.

Michael Nagle | Bloomberg | Getty Images

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.