Amazon Pausing Some Data Center Lease Deals: Wells Fargo

After a whirlwind few years of investment activity, one of the world’s biggest tech companies has reportedly paused some of its data center leasing deals.

Amazon Web Services has halted an undisclosed number of its colocation data center leases, particularly outside of the U.S., according to a report from Wells Fargo on Monday, citing confidential sources. The scale of the pause wasn’t immediately clear, but the situation is similar to that of Microsoft lately, which is also “digesting aggressive recent lease-up deals,” per Wells Fargo. 

It does not appear that Amazon, which is one of the world’s largest data center “hyperscalers,” is cancelling already approved deals, Wells Fargo analysts noted.

It’s too early to tell whether the freeze is cause for concern or just the natural fluctuation of Amazon’s operations. Such “digestion” periods aren’t uncommon for large data center tenants, particularly after periods of heightened activity. Reasons for pausing lease-up deals are legion, including utility power slipping, changes in infrastructure needs and supply chain disruptions.

“We have almost two decades of experience delivering data center capacity to meet customer demands, when and where they need it,” Kevin Miller, AWS’s vice president of global data centers said in a LinkedIn post on Monday. “That experience has taught us to consider multiple solutions in parallel. 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.

“This is routine capacity management, and there haven’t been any recent fundamental changes in our expansion plans.”

It’s certainly true that Amazon has had an intense year on the data center investment front, particularly in Northern Virginia.

Aside from a 60-acre development in the works near Hattontown, Va. — which is set to become the largest data center campus in the state’s Fairfax County — the tech giant in September purchased a 39-acre site in Manassas for about $57 million, 91 acres in Manassas for $218 million in May, and 140 acres for $152 million last January. Microsoft, for its part, paid nearly $466 million for 124 acres in Gainesville in March 2024.

Amazon’s current data center portfolio is vast. AWS notches over 9 gigawatts of capacity under its belt, with likely more in the pipeline but not yet delivered, according to Wells Fargo. Most of the company’s portfolio, some 70 percent, is self-built, with about 2.5 gigawatts of leased capacity. Yet Amazon currently has about 23 GWs of self-built capacity planned long term. (One gigawatt is enough to power roughly 750,000 homes.)

Three other major data center hyperscalers, however — Meta, Google and Oracle — are still active on the investment front, per Wells Fargo. Nvidia, Apple and OpenAI are also undergoing heightened data center activity. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.