Amazon Pauses Some Data Center Lease Talks Amid Economic Uncertainty

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Amazon has paused some of its data center lease discussions, particularly in international markets, signaling a potential slowdown in its cloud division’s expansion, according to Wells Fargo analysts. This pause could be linked to rising economic uncertainty, which is prompting companies to reassess their spending on AI infrastructure, including costly Nvidia chips. 

Wells Fargo analysts noted that while Amazon is not canceling any existing agreements, it is taking a more cautious approach to new lease deals, similar to recent moves by Microsoft. The cloud industry giants, referred to as "hyperscalers," are becoming more selective with leasing large facilities and are tightening their timelines for securing capacity before the end of 2026. Despite this, companies like Meta, Google, and Oracle are still actively pursuing data center leases.

Amazon responded to the report, downplaying the concerns, stating that the pause is part of routine capacity management, and there have been no significant changes to their expansion plans. 

In a related move, Microsoft recently canceled data center projects that were set to use significant amounts of electricity in the U.S. and Europe, citing an oversupply compared to its demand forecasts.

The growing skepticism among investors about the significant spending on artificial intelligence by U.S. tech firms has been compounded by the emergence of Chinese competitor DeepSeek, which is offering AI technology at a fraction of the cost of Western rivals. Despite this, Amazon remains committed to its AI investments, with CEO Andy Jassy emphasizing that these expenditures are crucial for staying competitive in the market.

Paraphrasing text from "Reuters" all rights reserved by the original author