According to banks Wells Fargo and TD Cowen, Amazon has halted negotiations on some co-location data center deals, primarily in Europe. The news comes shortly after several reports have indicated Microsoft has paused or cancelled its data center plans.

“It’s not clear the magnitude of the pause,” a Wells Fargo report reads, “but the positioning is similar to what we’ve recently heard from MSFT—they are digesting aggressive recent lease-up deals.” It goes on to emphasize that Amazon still appears to be going through with deals already signed. Co-location is the concept of sharing enormous infrastructure costs by building data in partnership with other companies that need it.

It is important to keep in mind that other companies, including Meta and xAI, continue to aggressively build out data centers to fuel their AI models. Building out large-scale data centers requires significant amounts of power, which grids have struggled to satisfy, and Amazon may need more time to open data centers already under construction. The Wells Fargo report states that the e-commerce giant already has 9 GWs (gigawatts) of active power capacity in its existing data center infrastructure.

Kevin Miller, a vice president of global data centers at Amazon Web Services wrote a LinkedIn post responding to the Wells Fargo report. He said that Amazon has begun to “consider multiple options in parallel,” and that it routinely changes plans on where to build out new server infrastructure based on evolving needs. It may realize it needs more capacity in one place than another, for example.

Experts say that America’s AI industry cannot rely on intermittent power. Because wind and solar rely on the environment to operate the wind must be blowing and the sun shining they must be backed up by reliable sources like coal.

Bjorn Lomborg, the president of the Copenhagen Consensus and a visiting fellow at Stanford University’s Hoover Institution, points out the problem.

‘‘In the last 10 years, solar and wind power use has reached unprecedented levels. However, this increase hasn’t led to a reduction in fossil fuel consumption. In fact, fossil fuel use has grown during this period. Numerous studies show that adding renewable eneigy adds to energy consumption instead of replacing coal, gas or oil. Recent research reveals that for every six units of new green energy, less than one unit displaces fossil fuels.”

CEO Satya Nadella has tried to tame expectations regarding the AI revolution, saying in an interview that the technology has not yet turned into a meaningful lift for the U.S. economy, though his company has affirmed plans to spend $80 billion on infrastructure in the next few years.

Amazon reports its next earnings on May 1st, and there will be close eyes on how AI demand is looking. Microsoft recently pulled back on an ambitious $1 billion data center project in Ohio, surprising officials there who offered the company generous tax incentives to snag the deal despite concerns that it would employ very few people and require immense energy and water resources.