diff --git a/internal/langserver/handlers/initialize.go b/internal/langserver/handlers/initialize.go
index bb19995f8..db0ea9aef 100644
--- a/internal/langserver/handlers/initialize.go
+++ b/internal/langserver/handlers/initialize.go
@@ -138,6 +138,30 @@ func (lh *logHandler) Initialize(ctx context.Context, params lsp.InitializeParam
 	}
 	walker.SetLogger(lh.logger)
 
+	var excludeModulePaths []string
+	for _, rawPath := range cfgOpts.ExcludeModulePaths {
+		modPath, err := resolvePath(rootDir, rawPath)
+		if err != nil {
+			lh.logger.Printf("Ignoring excluded module path %s: %s", rawPath, err)
+			continue
+		}
+		excludeModulePaths = append(excludeModulePaths, modPath)
+	}
+
+	walker.SetExcludeModulePaths(excludeModulePaths)
+	walker.EnqueuePath(fh.Dir())
+
+	// Walker runs asynchronously so we're intentionally *not*
+	// passing the request context here
+	walkerCtx := context.Background()
+
+	// Walker is also started early to allow gradual consumption
+	// and avoid overfilling the queue
+	err = walker.StartWalking(walkerCtx)
+	if err != nil {
+		return serverCaps, err
+	}
+
 	if len(params.WorkspaceFolders) > 0 {
 		for _, folderPath := range params.WorkspaceFolders {
 			modPath, err := pathFromDocumentURI(folderPath.URI)
@@ -176,24 +200,7 @@ func (lh *logHandler) Initialize(ctx context.Context, params lsp.InitializeParam
 		return serverCaps, nil
 	}
 
-	var excludeModulePaths []string
-	for _, rawPath := range cfgOpts.ExcludeModulePaths {
-		modPath, err := resolvePath(rootDir, rawPath)
-		if err != nil {
-			lh.logger.Printf("Ignoring excluded module path %s: %s", rawPath, err)
-			continue
-		}
-		excludeModulePaths = append(excludeModulePaths, modPath)
-	}
-
-	walker.SetExcludeModulePaths(excludeModulePaths)
-	walker.EnqueuePath(fh.Dir())
-
-	// Walker runs asynchronously so we're intentionally *not*
-	// passing the request context here
-	err = walker.StartWalking(context.Background())
-
-	return serverCaps, err
+	return serverCaps, nil
 }
 
 func resolvePath(rootDir, rawPath string) (string, error) {
diff --git a/internal/langserver/handlers/initialize_test.go b/internal/langserver/handlers/initialize_test.go
index 3ba93ceb6..7c661c5e5 100644
--- a/internal/langserver/handlers/initialize_test.go
+++ b/internal/langserver/handlers/initialize_test.go
@@ -92,3 +92,30 @@ func TestInitialize_withInvalidRootURI(t *testing.T) {
 	    "rootUri": "meh"
 	}`}, code.SystemError.Err())
 }
+
+func TestInitialize_multipleFolders(t *testing.T) {
+	rootDir := TempDir(t)
+	ls := langserver.NewLangServerMock(t, NewMockSession(&MockSessionInput{
+		TerraformCalls: &exec.TerraformMockCalls{
+			PerWorkDir: map[string][]*mock.Call{
+				rootDir.Dir(): validTfMockCalls(),
+			},
+		},
+	}))
+	stop := ls.Start(t)
+	defer stop()
+
+	ls.Call(t, &langserver.CallRequest{
+		Method: "initialize",
+		ReqParams: fmt.Sprintf(`{
+	    "capabilities": {},
+	    "rootUri": %q,
+	    "processId": 12345,
+	    "workspaceFolders": [
+	    	{
+	    		"uri": %q,
+	    		"name": "root"
+	    	}
+	    ]
+	}`, rootDir.URI(), rootDir.URI())})
+}
diff --git a/internal/terraform/module/walker.go b/internal/terraform/module/walker.go
index 2e30c66eb..3def6072d 100644
--- a/internal/terraform/module/walker.go
+++ b/internal/terraform/module/walker.go
@@ -50,6 +50,11 @@ type Walker struct {
 	excludeModulePaths map[string]bool
 }
 
+// queueCap represents channel buffer size
+// which when reached causes EnqueuePath to block
+// until a path is consumed
+const queueCap = 50
+
 func NewWalker(fs filesystem.Filesystem, modMgr ModuleManager) *Walker {
 	return &Walker{
 		fs:        fs,
@@ -58,7 +63,7 @@ func NewWalker(fs filesystem.Filesystem, modMgr ModuleManager) *Walker {
 		walkingMu: &sync.RWMutex{},
 		queue:     newWalkerQueue(fs),
 		queueMu:   &sync.Mutex{},
-		pushChan:  make(chan struct{}, 1),
+		pushChan:  make(chan struct{}, queueCap),
 		doneCh:    make(chan struct{}, 0),
 	}
 }
@@ -100,6 +105,10 @@ func (w *Walker) EnqueuePath(path string) {
 	defer w.queueMu.Unlock()
 	heap.Push(w.queue, path)
 
+	w.triggerConsumption()
+}
+
+func (w *Walker) triggerConsumption() {
 	w.pushChan <- struct{}{}
 }