Microsoft has cancelled leases on datacenter capacity in the US, indicative of a potential overestimate of AI service demand. TD Cowen reported that Microsoft had cancelled multiple leases, reallocating some international spending to the US. The company has also delayed converting Statement of Qualification documents into signed lease agreements, raising questions about its datacenter investment strategy. This behavior mirrors actions taken by Meta previously. Microsoft aimed to invest around $80 billion in AI-related datacenters for the financial year 2025, yet current actions suggest a cautious approach moving forward.
Microsoft is reportedly cancelling leases on datacenter capacity in the US, suggesting a potential overestimation of demand for AI services.
TD Cowen reported Microsoft's pullback on datacenter spending, indicating the company may be in an oversupply position after reallocating a portion of its international spend.
Microsoft is using facility/power delays as justification for lease cancellations, a tactic also previously employed by Meta, indicating a decrease in capital expenditures.
The conversion rate of '500 docs' into signed lease agreements is normally close to 100%, signaling construction commencement, raising uncertainty about Microsoft's strategy.
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