Microsoft has walked away from data center projects in the US and Europe to the tune of 2GW, said TD Cowen analysts.
First reported by Bloomberg, the cancelations follow previous speculation from TD Cowen that the cloud giant had walked away from 200MW of data center developments and leases in February 2025.
The TD Cowen analysts said in the new note, published March 26, that it included lease cancellations and deferrals.
TD Cowen added that Google had taken over some leases in Europe, while Meta had claimed some freed capacity in the continent.
DCD has reached out to Meta and Google for comment.
Microsoft provided Bloomberg with the following comment: "Thanks to the significant investments we have made up to this point, we are well positioned to meet our current and increasing customer demand. Last year alone, we added more capacity than any prior year in history.
“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.”
This statement is word-for-word identical to that provided in response to the February reports.
The company added that it remains on track to spend around $80bn building out AI data centers in 2025, as announced by Microsoft in January of this year. Bloomberg notes that this should slow down in the following fiscal year.
At the time of the February report, not all analysts had the same take on the matter. “To me this all looks and sounds like business as usual,” Mizuho Securities analyst Jordan Klein said in a note. “A company this large and with $80 billion of annual spend has the right to move in and out of data center leases, many of which were never officially signed.”
Klein further suggested that, as many hyperscalers use a mix of owned and leased land, "tweaking" of plans is to be expected.
Whether the increased scale of cancelations changes this is unclear.
This year saw Microsoft lose its position as OpenAI's exclusive cloud provider following the $500bn Stargate data center initiative announced by the AI company.
Despite this, Microsoft has retained the "right of first refusal" on new capacity and, "to further support OpenAI, Microsoft has approved OpenAI’s ability to build additional capacity, primarily for research and training of models."
TD Cowen analysts Michael Elias, Cooper Belanger, and Gregory Williams wrote in the latest research note: “We continue to believe the lease cancellations and deferrals of capacity points to data center oversupply relative to its current demand forecast.”
Following the report, Microsoft's shares fell 1.31 percent.
This echos sentiment expressed earlier this week by Alibaba Group chairman Joe Tsai, who said during the HSBC Global Investment Summit in Hong Kong that he sees "the beginning of some kind of bubble" forming.
Tsai added: “I’m still astounded by the type of numbers that are being thrown around in the United States about investing into AI.
“People are talking, literally talking about $500 billion, several hundred billion dollars. I don’t think that’s entirely necessary. I think in a way, people are investing ahead of the demand that they’re seeing today, but they are projecting much bigger demand.”
Alibaba Group plans to spend around $53 billion in cloud and AI infrastructure in the next three years, which the company said will be its "most concentrated and highest level of investments."
Microsoft is not alone in massive spending commitments to AI infrastructure. Amazon has vowed to spend $100 billion, Google $75 billion, and Meta is expecting between $60 to 65 billion.
