The multi-billion dollar global investment in data centres (DC) driven by surging artificial intelligence (AI) demand has been thrown into question by Microsoft reportedly stepping back from new DC projects in the United States and Europe.
TD Cowen analysts wrote on Wednesday that the technology giant had abandoned DC projects, which were set to use two gigawatts of electricity in the U.S. and Europe in the last six months, due to an oversupply, according to media reports.
The analysts from the U.S. investment bank and financial services company wrote the withdrawal from new capacity leasing was largely led by the decision not to support additional training workloads from ChatGPT maker OpenAI, Reuters and Bloomberg reported.
In an article, Reuters quoted a Microsoft spokesperson as saying its plans to invest more than US$80 billion (A$127 billion) in AI and cloud computing capacity this fiscal year were on track.
"While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions," the spokesperson said.
The analysts from TD Cowen wrote in a note that they believed Alphabet unit Google and Meta Platforms had stepped in to fill the spare capacity in international markets and the U.S., respectively.
The TD Cowen analysts unnerved investors in February when they wrote Microsoft had scrapped leases totalling "a couple of hundred megawatts" of capacity with at least two private data centre operators.
But AI cloud startup CoreWeave, which provides access to data centres, earlier this month said it had not seen any contract cancellations after the Financial Times reported that Microsoft, its largest customer, had moved away from some agreements.
Microsoft shares closed down $5.19 (1.31%) at $389.97 on Wednesday (Thursday AEDT), capitalising the company at $2.9 trillion.
