- Microsoft has reportedly canceled data center leases amid shifting infrastructure priorities
- TD Cowen analysts suggest lease deferrals reflect oversupply vs demand
- Microsoft doesn’t deny the report but says it’s investing $80 billion in infrastructure
We recently reported Microsoft had cancelled leases with at least two private data center operators in the US, totaling “a couple hundred megawatts,” and how the company was also not converting “so-called statements of qualifications into leases,” according to claims from TD Cowen analysts.
Shortly after that news broke, Microsoft pulled out of a $12 billion deal with CoreWeave (the “WeWork of AI”), passing on buying more data center capacity from the AI hyperscaler. That option was snapped up by OpenAI, but as it counts Microsoft as its biggest backer, it was essentially paying CoreWeave with Microsoft money!
Microsoft appears to be taking a more tactical approach to AI spending, a move that is echoed in a new Bloomberg report quoting TD Cowen analysts saying Microsoft has walked away from additional data center projects in the US and Europe.
On track to spend $80 billion
Bloomberg writes, “Microsoft’s retrenchment in the last six months included lease cancellations and deferrals, the TD Cowen analysts said in their latest research note. Alphabet Inc.’s Google had stepped in to grab some leases Microsoft abandoned in Europe, the analysts wrote, while Meta Platforms Inc. had scooped up some of the freed capacity in Europe.”
Responding to the article, Microsoft pointed out that it was still on track to spend about $80 billion investing in growing infrastructure projects.
“Thanks to the significant investments we have made up to this point, we are well positioned to meet our current and increasing customer demand,” a Microsoft spokesperson said in a statement.
“While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions. This allows us to invest and allocate resources to growth areas for our future.”
Bloomberg adds TD Cowen analysts Michael Elias, Cooper Belanger, and Gregory Williams said, “We continue to believe the lease cancellations and deferrals of capacity points to data center oversupply relative to its current demand forecast.”
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waynewilliams@onmail.com (Wayne Williams)
