Doubts Rise About AI Data Center Investment Amid Economic Uncertainty
Uncertainty over tariffs and a wider economic downturn are forcing investors to be more cautious about AI data center investments. At the beginning of 2025, big tech companies like Meta, Amazon, Alphabet, and Microsoft were planning to spend $320 billion on artificial intelligence, particularly on AI data centers. However, the current economic uncertainty is making investors reevaluate their plans.
Jeff Brown, CEO of T2 Capital Management, invested in four Midwest data centers in 2023. The construction costs have risen significantly since then, partly due to tariffs on imported materials like concrete and steel. Brown noted that building those data centers now would be “20% or more” expensive than when he initially invested.
Microsoft has paused some of its data center construction projects, including a $1 billion project in Ohio. Amazon has also slowed down its data center leasing activities. While neither company has publicly blamed higher costs or tariffs, experts believe that these factors are likely contributing to their cautious approach.
Angelo Zeno, senior vice president of equity research at CFRA Research, expects big tech companies to continue spending on AI data centers this year. However, he warns that significant deterioration in the macro economy could lead to a reevaluation or scaling back of these plans.
Brent Thill, tech sector leader at Jefferies, noted that non-tech companies are still in the experimental phase with AI and are dealing with their own uncertainties. If a recession occurs, tech companies may have less revenue to invest in AI, making billion-dollar data centers a tougher sell, especially if the adoption of AI technology is slower than expected.
