Amazon has halted some data center leasing talks with partners, signaling potential slowdown in infrastructure expansion.

Amazon.com has paused some data center lease talks for its cloud division, particularly in overseas markets, according to Wells Fargo analysts. The pause represents a short-term slowdown in leasing for large-scale facilities and reflects rising economic uncertainty that is forcing companies to rethink how they spend billions of dollars earmarked for AI infrastructure, including costly Nvidia chips. While the magnitude of Amazon's pause remains unclear, Wells Fargo noted it appears similar to Microsoft's recent pullback. Rather than canceling signed deals, Amazon is "digesting aggressive recent lease-up deals," the analysts said.

The broader pattern among hyperscalers reveals a more cautious approach to expansion. According to Wells Fargo, "It does appear like the hyperscalers (big cloud companies) are being more discerning with leasing large clusters of power, and tightening up pre-lease windows for capacity that (would) be delivered before the end of 2026." However, Meta, Alphabet-owned Google, and Oracle remain active in leasing during this period. Amazon downplayed concerns about the pause, with Kevin Miller, vice president of Amazon Web Services Global Data Centers, stating on LinkedIn that "This is routine capacity management, and there haven't been any recent fundamental changes in our expansion plans."

Microsoft's data center pullback has been more significant. The company abandoned data center projects set to use 2 gigawatts of electricity in the U.S. and Europe in the last six months, with TD Cowen analysts attributing the decision to oversupply relative to current demand forecasts. Investor skepticism about heavy artificial intelligence spending by U.S. tech firms has grown due to slow returns on investment and the emergence of Chinese startup DeepSeek, which demonstrated AI technology at substantially lower costs than Western competitors.

Despite these concerns, Amazon continues substantial investments in generative AI, releasing a variety of chatbots serving sellers, businesses, and consumers. CEO Andy Jassy justified the billions of dollars in outlays for artificial intelligence development earlier this month, asserting that the investment was necessary to remain competitive in the evolving technology landscape.