(Reuters) - Microsoft has abandoned data center projects set to use 2 gigawatts of electricity in the U.S. and Europe in the last six months due to an oversupply relative to its current demand
Microsoft Reduces Data Center Leases in US and Europe
(Reuters) - Microsoft has abandoned data center projects set to use 2 gigawatts of electricity in the U.S. and Europe in the last six months due to an oversupply relative to its current demand forecast, TD Cowen analysts said on Wednesday.
The tech giant's backtracking includes deferrals and cancellations of existing data center leases in both regions in the past month, the analysts led by Michael Elias said in a note.
Microsoft's withdrawal from new capacity leasing was largely led by the decision not to support additional training workloads from ChatGPT maker OpenAI, according to the note.
Investor skepticism about the hefty artificial intelligence spending by U.S. tech firms has increased due to slow payoffs and the rise of Chinese startup DeepSeek, which showcased AI technology at a much lower cost than its Western rivals.
TD Cowen's supply chain checks indicate that Microsoft's pullback has led to Alphabet's Google stepping in to backfill the capacity in international markets, while Meta Platforms does the same in the U.S.
Microsoft, which plans to invest over $80 billion in AI and cloud capacity this fiscal year, did not immediately respond to Reuters' request for comment.
The TD Cowen analysts said in February that Microsoft had scrapped leases totaling "a couple of hundred megawatts" of capacity with at least two private data center operators.
(Reporting by Juby Babu in Mexico City; Editing by Shreya Biswas)
