Microsoft Taps the Brakes on AI Data Center Expansion Amidst Oversupply Concerns
Microsoft scales back data center leases amidst concerns of AI infrastructure oversupply raising questions about its aggressive AI investment strategy
Matilda
Microsoft Taps the Brakes on AI Data Center Expansion Amidst Oversupply Concerns
In a move that has sent ripples through the tech world, Microsoft has reportedly scrapped several data center leases in the United States, hinting at a potential oversupply of AI infrastructure. This development, brought to light by TD Cowen analysts, comes amidst growing skepticism about the massive investments tech giants are pouring into AI, particularly in light of the rapid advancements and cost-effectiveness of AI technologies from Chinese rivals like DeepSeek. Microsoft's decision to cancel leases for "a couple of hundred megawatts" of capacity with at least two private data-center operators, as reported by TD Cowen, marks a significant shift in the company's strategy. This, coupled with the pausing of conversions of statement of qualifications (precursors to formal leases), suggests a more cautious approach to AI infrastructure expansion. While Microsoft maintains that its planned investment of over $80 billion in AI and cloud capacity this fiscal year remains …
