Microsoft Cancels Leases for AI Data Centers, Analyst Says

Published On Feb 24, 2025, 1:41 AM

Microsoft Corporation (MSFT) has recently canceled leases for a significant portion of its planned data center capacity in the U.S., indicating potential concerns about overbuilding in the AI sector, according to TD Cowen analysts. The company, which has committed to spending around $80 billion on AI infrastructure this fiscal year, may be reassessing the demand for its AI services following emerging competition in the AI arena, particularly from lower-cost alternatives like DeepSeek. Despite these cancellations, Microsoft maintains its spending plans for the year, indicating it anticipates sustained growth. The cancellation of leases could reflect Microsoft reevaluating its infrastructure strategy in light of perceived overcapacity in the market.