Amazon Pauses Data Center Leasing Talks Amid Rising Economic Uncertainty
Amazon.com has temporarily halted some data center lease negotiations for its cloud division, particularly in international markets, indicating a potential short-term slowdown in large-scale facility leasing, according to a report by Wells Fargo analysts on Monday.
This move by the largest U.S. cloud company is seen as a sign that growing economic uncertainty is prompting businesses to reassess their spending on AI infrastructure, which includes expensive Nvidia chips. The magnitude of Amazon’s pause remains unclear, but it is reportedly similar to Microsoft’s recent pullback.
Rather than canceling signed deals, Amazon is “digesting aggressive recent lease-up deals,” the analysts noted. They added that other major cloud companies like Meta, Alphabet-owned Google, and Oracle remain active in leasing. Amazon downplayed the report, stating that it is “routine capacity management” and that there have been no fundamental changes in their expansion plans, according to Kevin Miller, Vice President of Amazon Web Services Global Data Centers.
This development comes as rival Microsoft abandoned data center projects that were set to consume 2 gigawatts of electricity in the U.S. and Europe over the past six months due to an oversupply relative to current demand forecasts, as reported by TD Cowen analysts in March. Investor skepticism about the significant AI spending by U.S. tech firms has grown due to slow returns and the emergence of Chinese startup DeepSeek, which has showcased AI technology at a lower cost than its Western counterparts.
Like its competitors, Amazon is heavily investing in generative AI, including the release of various chatbots for sellers, businesses, and consumers. CEO Andy Jassy recently justified the company’s billions of dollars in AI development expenditures, stating that the investment is necessary to remain competitive.
The pause in data center leasing talks reflects a cautious approach by major tech companies amid economic uncertainty and evolving AI landscape.
