Microsoft has scrapped leases for hundreds of megawatts of data center capacity in the U.S., signaling a potential shift in its AI infrastructure strategy, according to TD Cowen analysts.
The tech giant, which had previously allocated $80 billion for capital spending this fiscal year — mostly for AI — appears to be adjusting its approach. Analysts led by Michael Elias cited supply chain checks, revealing Microsoft canceled leases with at least two private data center operators. Additionally, the company has paused converting statements of qualifications — early steps before formal lease agreements — mirroring similar moves by Meta to curb capital expenses.
The move has sparked investor skepticism about the massive AI infrastructure investments made by U.S. tech firms. Concerns are mounting over slow payoffs and rising competition, particularly from Chinese startup DeepSeek, which has demonstrated AI technology rivaling or even surpassing Western counterparts at lower costs.
Despite the lease cancellations, Microsoft has denied any major shift in its data center plans. According to brokerage Jefferies, which hosted Microsoft’s investor relations team in Sydney, the company reaffirmed its commitment to AI investments.
Shares of Microsoft, which lagged behind other Big Tech stocks last year, rose about 0.5% in premarket U.S. trading.
Analysts suggest the canceled leases could reflect a combination of lower demand and Microsoft’s previous urgency to secure capacity. Bernstein analyst Mark Moelder noted the company may have overcommitted to data center and GPU capacity, paying premiums to meet AI demand during supply shortages.
While the cancellations hint at some recalibration, they also highlight the intense push — and the risks — tied to AI infrastructure growth.
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