U.S. Stock Big Tech Summarizes Major Issues

As a result of our channel check at PTC this week, this year’s data center lease contract is expected to record an AI-driven increase in yoy. Google’s data center transactions have increased in size again after a temporary pause, but Oracle transactions are significantly smaller. However, MSFT continues to lead the leading charge, and AMZN is looking to close the distance.

Google: According to our research, Google is expanding its lease plan focused on AI-powered data centers. Google’s data center capital expenditure is expected to double.

Microsoft: With high lease contract speeds in 2023, Microsoft is the most active data center capacity leasing company among hyperscalers. Microsoft is working to secure capacity with 1) end-to-end data center campuses, 2) large individual data center sites, and 3) turnkey co-lenders in third-party data centers.

Microsoft’s demand strength appears to be increasing, which is positive for Digital Realty’s short-term leasing opportunities.

AMAZON: Amazon is also significantly increasing data center demand, with ~2GW lease agreements, especially in Latin America. Our research shows that Amazon is working on an additional Amazon data center contract of about 1.1GW. Amazon appears to be taking a strategy of balancing power supply and turnkey collateral lease. This is positive for digital realty’s short-term lease opportunities.

Meta: Meta’s Data Center Plan contains a large portion of the data center lease agreement canceled after the Metaverse Shield check carried out at PTC 2023. The 4.2B capital expenditure program was cut, reducing capital expenditure related to Metaverse Shield.

In the context of 2023, Microsoft signed an approximately 2.4-GW U.S. data center lease (based on specific contracts), and Amazon signed an approximately 2-GW lease in the U.S. alone. Demand intensity continued to strengthen until 2024, with at least 96 MW of large contracts already signed.