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Microsoft (NASDAQ:MSFT) has sparked fresh concerns in the AI sector after analysts at TD Cowen revealed the tech giant has canceled over 2GW of data center leases in the U.S. and Europe over the past six months. This move follows earlier signs of a slowdown in Microsoft’s data center activity and is reportedly tied to the company’s decision to halt support for additional OpenAI training workloads.
AI-related stocks reacted sharply to the news. NVIDIA (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) each dropped 5%, while server makers Dell Technologies (NYSE:DELL) and Super Micro (NASDAQ:SMCI) declined 3% and 9%, respectively. Analyst Michael Elias emphasized that Microsoft has both deferred and canceled existing leases in recent weeks, indicating a shift in demand.
The lease cancellations suggest an oversupply of data center capacity, with Microsoft aiming to align its infrastructure more closely with medium-term cloud and AI inference workloads. Instead of overcommitting, the company appears to be optimizing existing assets while maintaining runway in key markets.
Meanwhile, other tech giants are stepping in. Google (NASDAQ:GOOGL) is reportedly backfilling the vacated capacity in international markets, driven by rising internal demand. Meta (NASDAQ:META) is increasing its data center capacity in the U.S. to support its Llama AI initiative.
OpenAI, no longer relying solely on Microsoft, is securing capacity directly from third parties like CoreWeave. The company plans to build out its own infrastructure with long-term projects such as the massive Stargate data centers, ranging from 800MW to 1.5GW each, and totaling over 6GW. OpenAI’s recent hires from major hyperscalers point to a strategy of self-building future data centers.
These shifts mark a significant reshuffling in the AI infrastructure landscape, reflecting evolving strategies among top players.
