Shares of Microsoft and Amazon Rise as Data-Center Expansion Slows
Investors lifted the stocks of Microsoft and Amazon after local votes curbed data-center projects, reflecting market concerns over high capital costs and energy impacts.
Investors pushed the shares of Microsoft and Amazon up about 7% on Tuesday, despite the companies’ extensive plans to expand data-center capacity. The rally follows a wave of local referendums that sought to limit new data-center construction, with 41 votes held and 40 expected to pass by margins of roughly 75% to 25%.
Analysts noted that the market has grown wary of the large expenditures required for data-center development, including costly chip purchases and supply-chain investments. The sentiment suggests that investors view the reduced pace of construction as a positive development for the companies’ balance sheets.
While the broader data-center sector and related power-supply firms saw declines, the performance of Microsoft and Amazon indicates that investors may be rewarding the firms for aligning expansion plans more closely with free-cash-flow expectations.
Commentary highlighted that Amazon’s core logistics business remains less exposed to artificial-intelligence-related risks compared with software-focused peers. Observers also pointed to upcoming policy decisions in states such as Texas and Ohio, where a significant share of planned data-center capacity is located, and to potential legislative actions by congressional Democrats concerning artificial intelligence and data-center regulation.