How will tariffs impact Big Tech’s AI data center plans? Not that much, says Morgan Stanley

Big Tech companies say they are still going full speed ahead on plans to build out $315 billion worth of data centers to power the AI boom. (Well, maybe not Microsoft.)

But what effect will the on-again-off-again tariffs have on these plans?

A new report from analysts at Morgan Stanley says perhaps very little. The main reason is that semiconductors and GPUs are excluded from the steepest tariffs (for now, at least). The analysts wrote:

“We view the Powering AI theme as relatively insulated from tariffs and economic weakness, given the benefits of AI adoption and commitment among LLM developers to continued innovation and cost reduction.”

According to the report, there are enough crucial GPUs in the channel (most of which are likely Nvidia chips), consumer demand for AI services is growing, and American AI companies like Meta, Amazon, and Google are still in the lead and will continue to improve efficiency, benefiting from their early big investments in AI infrastructure.

But the analysts still see some potential risks to these grand data center plans, like “power bottlenecks,” where aging energy grids can’t keep up with the massive electricity requirements of data centers, and potential inflation of the other materials needed to build this infrastructure.