Nvidia shares have fallen by 5.4%, while the Nasdaq index decreased by 3%. This downturn coincides with reports from Wells Fargo regarding AWS, Amazon’s cloud division, slowing its data centre expansions.
According to industry sources, AWS has paused parts of its leasing discussions, particularly impacting international sites. Though these shifts do not involve cancelling signed contracts, AWS is stepping back from its pipeline of Letters of Intent (LOIs) and Statements of Qualification (SOQs).
Cloud Providers Reassess Expansion Strategies
Microsoft has recently made similar moves, which suggests both companies are reassessing their aggressive expansion strategies. These actions could point to a reduced demand for data centres among major cloud providers.
The timing of these developments suggests a possible period of restraint in cloud expansion. This often follows a period of rapid technological growth, indicating a potential cooling off phase in the sector.
What’s described here paints a picture of a pullback in the high-speed race that’s defined cloud infrastructure investment so far this year. Nvidia’s share price isn’t merely slipping on general sentiment—it’s reacting directly to a reduction in expected near-term demand for the very servers and GPUs that power next-generation data centres. When hyperscalers signal pause by stepping back from expansion timelines, especially at a multinational level, we take note—and we act.
AWS’s decision to halt parts of its leasing process for future facilities, while not breaching existing contracts, sends a clear message: they’re less keen to commit to unfinalised projects until visibility improves. And when Microsoft also shows signs of caution, tightening its footprint in parallel, the industry tends to consider this more than just a blip. It tells us that capital allocation is becoming more selective, especially in spaces once thought to be on a one-way growth trajectory.
Recalibration In Data Center Investments
What we’re seeing, then, is not the start of contraction, but a kind of recalibration—a tightening of the belt after a period of unchecked optimism. If you’ve built a book loaded with exposure to hyperscaler growth or AI infrastructure demand, this is the moment to re-examine where your convexity lies. For us, this means revisiting expiry timelines on any directional bets tied to semiconductor names, particularly those whose fortunes are tethered closely to marginal cloud expansion. Delaying duration, or shifting implied volatility exposure into later quarters, might neutralise short-term downward pressure tied to supply-demand adjustments now being priced in.
Keep in mind what the numbers tell us—downside volatility in Nvidia has come quickly, sharper than general market downside, and that divergence matters. The compression suggests an unwind of AI-leveraged growth expectations, not a broad shift in equities. Forward-looking measures on implied skew remain elevated, and any crowded long positions are vulnerable if fundamental demand stories weaken even a bit more. From our side, we’re watching how open interest adjusts across major strike clusters to see if this is just reactive hedging or the start of more structured protective flow being put on.
Given where implieds now sit, there could be an opportunity to generate premium if we assume this softness stays contained without crashing into long-term structural problems. That said, re-rating trends like this one tend to unfold, rather than reverse sharply—so the strategy now leans more towards collecting efficiently on decay, rather than chasing quick reversion.
We’ll continue sizing short gamma modestly and tighten upside exposure on NVDA and semis until signs of leasing and capex momentum resume in future data points. If that happens, we can step back into risk. Until then, caution over enthusiasm.
