Wells Fargo Analysts Say Amazon Paused Some Data Center Lease Commitments

First came China’s “Deep Seek” moment at the start of the year. Then TD Cowen’s Michael Elias told clients Microsoft was scaling back data center projects in the U.S. and Europe. Shortly after, Goldman Sachs pulled forward its peak data center forecast to this year. Now, Wells Fargo analysts report that Amazon has paused some data center lease negotiations for its cloud division.

“Over the weekend, we heard from several industry sources that Amazon Web Services (AWS) has paused a portion of its leasing discussions on the colocation side (particularly international ones),” Wells Fargo analysts wrote in a note on Monday, adding, “The positioning is similar to what we’ve heard recently from MSFT.” 

The analysts noted that Amazon is not canceling signed deals. Instead, they’re digesting recent aggressive lease-up deals. 

“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,” the analysts said, noting that Meta and Alphabet-owned Google remain active in data center leasing. 

Kevin Miller, Vice President of AWS Global Data Centers, downplayed the Wells Fargo report in a LinkedIn post, calling the move “routine capacity management” and stating that there have been no recent fundamental changes to Amazon’s expansion plans.

After the unveiling of China’s ultra-cheap DeepSeek rival to ChatGPT in January, TD Cowen’s Michael Elias, a month later, first reported on Microsoft data center order cancellations – followed by a more recent note from the analyst that specified the big tech firm has walked away from data center projects in the U.S. and Europe, amounting to a capacity of approximately 2 gigawatts of electricity.

“We continue to believe the lease cancellations and deferrals of capacity points to data center oversupply relative to its current demand forecast,” Elias wrote in a note last month. 

Just a few weeks ago, Goldman’s James Schneider, Michael Smith, and others revised their peak data center capacity forecasts forward to 2025 (from late 2026). 

As soon as the Deep Seek moment happened. We said this development will likely revise the forecast. 

And that’s precisely what happened. 

The peak data center capacity forecast was issued in January. 

April’s revision.

Meanwhile, Amazon CEO Andy Jassy recently told CNBC’s Andrew Ross Sorkin that he did not forecast any cuts in data center construction.