- Analysts says Microsoft has cancelled leases with a minimum of two knowledge heart operators
- It might be reassessing AI infrastructure investments amid potential oversupply
- Regardless of changes, Microsoft maintains its $80 billion AI dedication
Microsoft will not be fairly as all-in on investing in AI infrastructure as current stories have urged. MarketWatch reported on a analysis be aware written by TD Cowen analysts which claims Microsoft has cancelled leases within the US with a minimum of two non-public knowledge heart operators.
The leases totaled “a pair hundred megawatts” and Microsoft can be just isn’t changing “so-called statements of {qualifications} into leases”. The identical analysts additionally report that Microsoft has moved a portion of deliberate worldwide spending to the US.
That is regardless of a current interview with Microsoft Chairman and Chief Government Satya Nadella, who mentioned AI provide and demand must meet and that tech corporations might want to exponentially make investments to make this occur.
Elevating broader questions
“When coupled with our prior channel checks, it factors to a possible oversupply place for Microsoft,” mentioned lead analyst Michael Elias. The group believes the shift is linked to OpenAI which Microsoft has shut ties to.
“Contemplate this: Microsoft was probably the most lively lessee of capability in 2023 and 1H24, at which era it was procuring capability relative to a capability forecast that contemplated incremental OpenAI workloads. Nevertheless, as we consider is indicated by its determination to pause building on a knowledge heart in Wisconsin – which our prior channel checks indicated was to assist OpenAI – there may be capability that it has seemingly procured, notably in areas the place capability just isn’t fungible to cloud, the place the corporate could have extra knowledge heart capability relative to its new forecast,” the analysts mentioned.
Writing concerning the information, Bloomberg mentioned, “A possible lease pullback by Microsoft raises broader questions on whether or not the corporate – one of many frontrunners amongst Massive Tech in AI – is rising cautious concerning the outlook for general demand. The corporate has mentioned it expects to spend $80 billion this fiscal yr on AI knowledge facilities, and on a late January earnings name, Chief Government Officer Satya Nadella mentioned Microsoft has to maintain spending to fulfill “exponentially extra demand.”
“Whereas we could strategically tempo or modify our infrastructure in some areas, we’ll proceed to develop strongly in all areas,” a Microsoft spokesperson advised Bloomberg. “Our plans to spend over $80 billion on infrastructure this FY stays on observe as we proceed to develop at a report tempo to fulfill buyer demand.”