Amazon Web Services, the world’s largest data center user, has reportedly paused someof its data center leasing discussions, indicating a slowdown in the tech giant’s near-term appetite for new data center capacity.
Amazon’s cloud division is “pulling back” from part of its pipeline of potential colocation data center lease deals, particularly in markets outside the United States, Wells Fargo analysts wrote in a research reportMonday, citing industry sources.
AWS isn't canceling executed leases but is halting the formal processes like letters of intent and statements of qualification that typically precede signed agreements with colocation providers, the report says.
Although it remains unclear just how widespread this pause is, AWS’ decision to trim its leasing pipeline comes on the heels of Microsoft similarlywithdrawing from data center leases and growing questions about the future of data center demand in general.
Since the report's release, AWS haspushed back on the idea that its leasing pause reflects any sort of retreat from its ambitious computing capacity and data center development plans. Wells Fargo analysts acknowledged in their note that the waylaid lease discussions may well be part of the normal hyperscale leasing cycle and not an indicator of a data center landscape nearing the point of saturation.
“It’s not clear whether AWS slowing some leases is an area of concern, or just the natural ebb and flow of hyperscale activity,” the report says. “It does appear like the hyperscalers are being more discerning with leasing large clusters of power, and tightening up pre-lease windows for capacity that [will] be delivered before the end of 2026.”
AWS’ leasing pause is alreadybeing framed as part of agrowing narrative of skepticism about whether bullish demand projections for data center capacity will ever come to fruition.
Fears of anoversupplied data center market first gained traction in January when the release of Chinese firm DeepSeek’sartificial intelligence model that seemed to use far less compute than competing products cast doubt on the fundamental thesis underpinning the sector's boom: that the world’s largest tech companies need to spend hundreds of billions of dollars on data centers to achieve their AI goals.
These oversaturation concerns seemingly gained supporting evidence earlier this month when Microsoft confirmed it is“slowing or pausing” some data center construction, including a planned $1B build-out in Ohio and part of a planned megacampus in Mount Pleasant, Wisconsin. This followed earlier reports that Microsoft was canceling lease dealsand pulling out of prelease negotiations for several different data center projects.
But in their note published Monday, Wells Fargo analysts suggest that the AWS and Microsoft leasing pullbacks may simply reflect periods of “digestion” — that after securing major blocks of capacity that meet certain computing needs, the companies are trimming redundant deals from their pipelines and determining how to redistribute resources toward other computing priorities.
This is a regular part of the hyperscale leasing cycle, the analysts wrote, and is typically followed by the resumption of aggressive leasing activity. They cited Google’s decision to slow leasing last year and walk away from close to 2 gigawatts of signed leases, a slowdown that was followed by a dramatic reacceleration of leasing in 2025.
“Historically, these ‘digestion’ periods last 6-12 months (and in some cases are much shorter) before the hyperscaler comes back looking for more capacity,” they wrote. “It’s not too uncommon to see reservations or options expire due to a host of reasons (utility power slipping, shifts in infrastructure needs, other supply chain constraints).”
Ina noteposted to LinkedIn in response to the Wells Fargo report, AWS Vice President for Global Data Centers Kevin Miller rejected the idea that the leasing pause reflected anything other than routine leasing patterns.
When planning data center expansion, AWS typically considers “multiple solutions in parallel,” pursuing several leasing options for the same capacity need, Miller wrote. When a clear winner emerges due to speed to market, cost or another reason, the firm will then pause or withdraw from discussions with competing providers.
“Some options might end up costing too much, while others might not deliver when we need the capacity. Other times, we find that we need more capacity in one location and less in another,” he wrote. “This is routine capacity management, and there haven’t been any recent fundamental changes in our expansion plans.”
Miller’s statement echoes commentsmade earlier this month by Amazon CEO Andy Jassy, whosaid the company has seen no attenuation of demand for computing power and that the firm intends to “keep building” data centers at the record pace anticipated at the start of the year.
Similarly, Google’s leaders made a point of publicly stating earlier this month that they have no plans to slow the firm’s pace of data center build-out and investment.
Nevertheless, with all four major tech giants set to release quarterly financial results within the next two weeks, investors and industry observers will be watching closely for any sign that hyperscalers’ long-term demand for data centers and the computing power inside them could be starting to wane despite these bullish pronouncements.
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