Microsoft's stock declined after analysts from TD Cowen revealed the company canceled some US data center leases, hinting at a possible oversupply situation. Their channel checks indicated that Microsoft has also slowed the conversion of statements of qualifications (SOQs) to leases and redirected some international spending towards the US. This move raises concerns about a potential reduction in AI demand, suggesting that Microsoft's growth forecasts may need revision. Overall, these developments point to Microsoft having excess data center capacity compared to its latest projections.
Microsoft has cancelled leases for some of its US data centers, indicating a potential oversupply position and suggesting AI demand may be lower than expected.
Analysts from TD Cowen indicate that Microsoft has pulled back on converting SOQs to leases and has re-allocated a considerable portion of its international spending to the US.
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