Microsoft Halts $1B Data Center Projects Amid AI Uncertainty and Economic Challenges

Microsoft puts $1B US DC builds on hold amid tariff worries

Committed $80B capex for DCs as recently as January. We wonder what changed? World War Fee Microsoft has called a halt to construction of three datacenter campuses in central Ohio, in a sign the tech giant is having to reappraise its infrastructure requirements amid uncertain economic circumstances and shifting AI demand. The Windows maker confirmed it put on hold $1 billion plans for three bit barn sites in Licking County - at New Albany, Heath and Hebron - citing a strategic investment review for the decision, telling The Register it will "not be moving forward at this time with our plans to build datacenters at the Licking County sites. We will continue to evaluate these sites in line with our investment strategy." Microsoft had committed to spending $80 billion on expanding its DCs as recently as January. It is understood that the Redmond megacorp is not selling off the land earmarked for the datacenters, suggesting it may intend to proceed with the projects at some point in future. "We sincerely appreciate the leadership and partnership of Ohio government officials and the support of Licking County residents. We are taking the appropriate steps to ensure the land at two of our sites can be used for farming and are following through with our development agreements to fund roadway and utility upgrades." The move comes after the company walked back on signing leases for gigawatts of extra capacity in the US and Europe back in February, partly caused by a decision not to support further training workloads for OpenAI, Redmond's AI development partner. Microsoft announced the first phase of its investment plan for the region last year, with the figure of an initial $1 billion investment mentioned for the facilities in New Albany, Heath, and Hebron. At the time, the company indicated that the project had "significant growth potential" for continued investment, plus the creation of "hundreds of direct jobs" if the bit barn campuses were built out to full capacity. It said that the three sites would play a critical role in expanding its cloud infrastructure to support the rapid global growth of its digital services - much of which has been driven by interest in generative AI and large language models (LLMs). Work is understood to have actually got underway at the New Albany site, with Microsoft issuing an update last year stating that clearance of the area started in late October, and preparation work was estimated to be complete by mid-2025. The company also told Heath residents at a "Microsoft open house" meeting last year that work on the campus there was projected to begin "in summer 2025," with the first of five datacenter buildings to be completed by early 2028. One possible explanation that The Register has already examined is that many datacenters will not have been designed to handle the power and cooling requirements of Nvidia's latest high-performance AI infrastructure, and some adjustments may have to be made. Another could be that the Redmond biz needs to reassess the costs surrounding such projects and how these will be impacted by the tariffs and other economic uncertainties that the Trump administration has recently unleashed. There have already been warnings that the latest tariffs target imports from countries including China, Taiwan, and South Korea, where a great deal of datacenter equipment and the components used within them are manufactured, which will bump up the cost of fitting out bit barns. "There's no doubt that the equipment that goes into datacenters will become significantly more expensive ... Microsoft has already started articulating a more balanced, cautious approach to their datacenter buildout, and to some extent Amazon as well," DA Davidson's Gil Luri told Reuters. Commercial real estate analysts CoStar noted that a 25 percent tariff on steel and aluminum, some of the raw materials used in construction, took effect March 12, which would further increase the cost of building out AI facilities. A Bloomberg report the day after "tariff liberation day" claimed the Windows maker had "recently halted talks for, or delayed development of, sites in Indonesia, the UK, Australia, Illinois, North Dakota and Wisconsin," according to its sources. Microsoft failed to elaborate on the reasons behind its decision to halt the Ohio projects when we asked. ®

Microsoft says it's 'slowing or pausing' some AI data center projects, including $1B plan for Ohio

AP Technology Writer (AP) -- Microsoft said it is "slowing or pausing" some of its data center construction, including a $1 billion project in Ohio, the latest sign that the demand for artificial intelligence technology that drove a massive infrastructure expansion might not need quite as many powerful computers as expected. The tech giant confirmed this week that it is halting early-stage projects on rural land it owns in central Ohio's Licking County, outside of Columbus, and will reserve two of the three sites for farmland. "In recent years, demand for our cloud and AI services grew more than we could have ever anticipated and to meet this opportunity, we began executing the largest and most ambitious infrastructure scaling project in our history," said Noelle Walsh, the president of Microsoft's cloud operations, in a post on LinkedIn. Walsh said "any significant new endeavor at this size and scale requires agility and refinement as we learn and grow with our customers. What this means is that we are slowing or pausing some early-stage projects." Microsoft didn't say Wednesday what other projects it has slowed outside of Ohio, but in late December it revealed it was pausing the later phases of a large data center project in Wisconsin. Analysts with TD Cowen reported earlier this year that Microsoft was also scaling back some of its international data center expansion and canceling some leases in the U.S. for use of data centers operated by other companies. Other analysts for months have tied some of the changes to a shift in Microsoft's close relationship with its business partner OpenAI, maker of ChatGPT. "OpenAI was moving in one direction" by prioritizing the development of ever-more advanced AI systems, which require vast computing resources to train on troves of data, while "Microsoft may not have been moving that same direction," said Craig Ellis, director of research at B. Riley Securities. The two companies announced on Jan. 21 that they were altering the agreement that had made Microsoft the exclusive provider of OpenAI's computing power, enabling the smaller company to build its own capacity, "primarily for research and training of models." It was the same day that newly inaugurated President Donald Trump touted OpenAI's partnership with Oracle and SoftBank to pledge $500 billion in new AI infrastructure in the U.S., starting with a data center in Texas. Microsoft has long built data centers around the world to run its cloud computing services. The generative AI boom accelerated the demand for such facilities, both to train new AI systems and to keep them running as millions of people start using chatbots and other AI tools at work and home. The computing it takes to run AI tools is expensive and requires a large amount of electricity -- so much so that Trump this week cited AI needs as part of the justification for using his emergency authorities to boost the U.S. coal industry, a reliable but polluting energy source. Tech companies have also sought to tap into nuclear power, including a proposed Microsoft-backed revival of the shuttered Three Mile Island plant in Pennsylvania, which would feed an electricity grid supplying data centers in Ohio as well as Virginia, the nation's biggest data center hub. Microsoft said it still plans to spend more than $80 billion globally to expand its AI infrastructure this fiscal year, which ends in June, and has already doubled its data center capacity over the past three years. "While we may strategically pace our plans, we will continue to grow strongly and allocate investments that stay aligned with business priorities and customer demand," Walsh said. The Ohio pause nevertheless came as a disappointment to local officials. Licking County has also attracted data center investments from Microsoft rivals Google and Meta Platforms and a highly anticipated semiconductor factory from Intel, though the struggling chipmaker in February pushed back the expected completion date for the project's first stage to 2030.

Does Microsoft know something we don't? Tech giant cools down on AI data center investment as another report claims company pullbacks

There are indications that we're on the verge of seeing a global capacity glut when it comes to data centers Global stock markets are in turmoil right now as President Donald Trump's tariffs begin to come into effect - but that's not the only problem facing the big tech firms. Microsoft is now the focus of a third Bloomberg report detailing pullbacks on its AI data center plans, raising fresh questions about how committed the American tech giant remains to its current level of investment in AI infrastructure. While Microsoft maintains it will spend around $80 billion on data centers in this fiscal year, it has acknowledged that growth will slow after that. Future focus will shift from new construction to outfitting existing infrastructure with servers and AI equipment. Bloomberg claims Microsoft has exited or paused data center projects in multiple regions. In the UK, it stepped away from a potential lease near Cambridge that was marketed for hosting advanced Nvidia chips. In Indonesia, parts of a data center campus an hour outside Jakarta have been put on hold. In North Dakota, talks dragged on so long with a potential tenant that Microsoft lost exclusivity, and expansion has also slowed in Wisconsin, where the company had already spent $262 million on construction, including nearly $40 million on concrete. Microsoft also recently pulled out of a plan to lease an additional $12 billion of data center capacity from CoreWeave. OpenAI stepped in to plug that gap, but since Microsoft is OpenAI's biggest funder, it likely used Microsoft's own money to do it. Some of the caution may come from signs that AI workloads are becoming less compute-intensive than expected, thanks in no small part to the "DeepSeek effect," where the Chinese AI startup demonstrated performance comparable to OpenAI with far fewer resources. This has led some investors to question whether the current rate of buildout can be justified. Meanwhile, a separate report from MIT Technology Review shows the scale of overcapacity in China. The government there fast-tracked more than 500 data center construction projects, with at least 150 completed by the end of 2024, but an estimated 80% of these new AI data center resources are unused. Together, these developments suggest that big tech's data center ambitions may be outpacing the current demand for AI services, at least for now, which is starting to prompt caution among investors and industry insiders.

Microsoft could be reassessing its AI plans while pulling back on data centers

Microsoft (MSFT-1.46%) has reportedly stopped or delayed data center projects across the globe, possibly signaling a reassessment of its artificial intelligence ambitions. The tech giant has pulled back on developing data center sites in countries such as Indonesia, Australia, and the U.K., as well as U.S. states including Illinois, North Dakota, and Wisconsin, Bloomberg reported, citing unnamed people familiar with the matter. The company has also stepped back from negotiations to lease space in the U.K. between London and Cambridge that would've hosted Nvidia's (NVDA-5.84%) chips, and another data center site near Chicago, Bloomberg reported. The delays could also be tied to construction issues, such as at a site near Jakarta and one in Mount Pleasant, Wisconsin, Bloomberg reported. A spokesperson for the company told Bloomberg that it plans "our data center capacity needs years in advance to ensure we have sufficient infrastructure in the right places." "As AI demand continues to grow, and our data center presence continues to expand, the changes we have made demonstrates the flexibility of our strategy," the spokesperson said. Microsoft did not immediately respond to a request for comment from Quartz. In February, analysts at TD Cowen (TD-1.42%) said in a note that Microsoft had canceled leases worth "a couple of hundred megawatts," or approximately two data centers worth of capacity. In some cases, Microsoft said "facility/power delays" were a reason for termination, the analysts said in the note, adding that Meta (META-5.75%) had previously used a similar justification to cancel data center leases. TD Cowen also noted that Microsoft "has pulled back on" converting statement of qualification agreements that typically turn into traditional leases. The analysts expressed uncertainty about whether Microsoft's actions represent a temporary delay or a complete termination of the agreements. Last week, the analysts said in another note that incremental channel checks showed that Microsoft had cancelled more data center leases in the U.S. and Europe since the initial note.

Something's Gone Wrong With Microsoft's Huge AI Data Center Investments

Data centers are everywhere. As the world's tech companies demand more computing power to make their software run, the facilities have popped up in every corner of the planet. They make up the backbone of global network servers, cloud computing -- and of course AI. Microsoft has been a major player in the global data center boom, but its ambitions may now be faltering, in a bellwether for the AI industry. The tech behemoth recently decided to scale back data center projects around the globe, in countries including the UK, Australia, and Indonesia. It's likewise pulled back on data center development in Illinois, North Dakota, and Wisconsin, according to Bloomberg. That's on top of last week's news that Microsoft had walked away from two data center projects in the US and Europe, piling on to a February announcement that it was cancelling data center leases. Microsoft's moves are a brisk 180 from the company's early-January plans to spend $80 billion on AI data centers in 2025. They come as the greater US economy crumbles in reaction to Donald Trump's so-called "reciprocal tariffs," which some analysts say are more akin to war-time economic sanctions. "These are just sanctions, imposed to intimidate countries and companies into submission like they're universities or law firms," said David Dayen, executive editor of The Prospect. "They're what a mob boss would do." Trump's tariffs are likely to have a hugely negative impact on the US tech sector more broadly, and on data centers specifically. Once these tariffs go into place, the prospect of building new data centers will become much more risky, as foreign-made resources skyrocket in price. Running existing facilities will likewise come at a premium, as renewable energy growth slows to a crawl and traditional energy costs soar. That's not to mention the already shaky ground of AI development. In recent months, some investors have grown wary that an economic bubble was forming around the AI industry -- a hypothesis that Microsoft's rollback would seem to support. The shaky CoreWeave IPO and nonexistent AI profits don't help. It's all piling up into a record low day for tech stocks, especially whales like Microsoft, which hit a one-year low as soon as the gates opened on Wall Street this morning. In all, the top seven US tech stocks -- Microsoft, Tesla, Nvidia, Alphabet (Google), Apple, Meta, and Amazon -- are poised to shed over $800 billion in market capacity today, a huge chunk of the $3 trillion in S&P 500 value erased in the 10 weeks since Trump took office. We now sit on the precipice of a new economic era. How this all shakes out for companies like Microsoft will probably be a tale for the history books. When it comes to tech, one thing's for sure: the AI hype train is now screaming out of the station.

Microsoft scales back global AI data center expansion plans amid emerging low-cost model trends - SiliconANGLE

Microsoft scales back global AI data center expansion plans amid emerging low-cost model trends Microsoft Corp. has reportedly pulled back on multiple planned data center projects three months after it announced plans to spend $80 billion to build artificial intelligence data centers through the current fiscal year. Bloomberg, referencing people familiar with the situation, claims that Microsoft had recently halted talks for, or delayed development of, sites in Australia, Indonesia, the U.K. and several U.S. states - Illinois, North Dakota and Wisconsin. Microsoft hasn't denied the report, with a spokesperson saying that Microsoft has made changes to its data center plans. "We plan our data center capacity needs years in advance to ensure we have sufficient infrastructure in the right places," the spokesperson said. "As AI demand continues to grow and our data center presence continues to expand, the changes we have made demonstrates the flexibility of our strategy." The delays and changes are said to include Microsoft withdrawing from negotiations to lease space in the U.K. at a site being marketed for its ability to host advanced Nvidia Corp. chips and halting negotiations for data center space at a site near Chicago. In other cases, Microsoft is claimed to have delayed construction, pausing work on a data center campus outside of Jakarta, Indonesia and has put on hold some planned expansion at a site in Mount Pleasant, Wisconsin. While Microsoft's response seems reasonable - it's not unusual for a large company with multi-billion dollar plans to make changes - it also comes at a time when some fear that AI is showing signs of a bubble, complicated by a shift in AI model development to requiring fewer resources. One of the early beliefs around AI - early as in as recently as December - is that AI development needs more and more computing power to advance, but then came along Chinese startup Hangzhou DeepSeek Artificial Intelligence Co., Ltd. in January with its DeepSeek-R1 model that threw what was conventional AI wisdom on its head. DeepSeek was trained for $5.6 million and didn't require massive billion-dollar AI data centers to develop. Other models from China have since emerged that deliver comparable results to top models from companies such as OpenAI, Google LLC, Anthropic PBC and others, all trained and developed for far less than their Western competitors. If Microsoft is indeed scaling back its AI data center efforts, it may well be doing so having seen the direction AI is currently heading and it's not one of high cost and scarcity versus low cost and ubiquity. As AI enters the mainstream - whether AI has hit its inflection point yet is arguable - the technology is on a race to the bottom in terms of cost of development. Microsoft is right to at least pause and consider where it should be spending its funds, given the shift in the market.

Microsoft Pulls Back on Data Centers From Chicago to Jakarta

(Bloomberg) -- Microsoft Corp. has pulled back on data center projects around the world, suggesting the company is taking a harder look at its plans to build the server farms powering artificial intelligence and the cloud. The software company has recently halted talks for, or delayed development of, sites in Indonesia, the UK, Australia, Illinois, North Dakota and Wisconsin, according to people familiar with the situation. Microsoft is widely seen as a leader in commercializing AI services, largely thanks to its close partnership with OpenAI. Investors closely track Microsoft's spending plans to get a sense of long-term customer demand for cloud and AI services. It's hard to know how much of the company's data center pullback reflects expectations of diminished demand versus temporary construction challenges, such as shortages of power and building materials. Some investors have interpreted signs of retrenchment as an indication that projected purchases of AI services don't justify Microsoft's massive outlays on server farms. Those concerns have weighed on global tech stocks in recent weeks, particularly chipmakers like Nvidia Corp. which suck up a significant share of data center budgets. Shares of Microsoft are down about 9% this year. Microsoft acknowledged making changes to its data center plans but declined to discuss most of the projects. "We plan our data center capacity needs years in advance to ensure we have sufficient infrastructure in the right places," a spokesperson said. "As AI demand continues to grow, and our data center presence continues to expand, the changes we have made demonstrates the flexibility of our strategy." Microsoft recently withdrew from negotiations to lease space between London and Cambridge in the UK at a site being marketed for its ability to host advanced Nvidia chips, according to people familiar with the talks, who requested anonymity to discuss a private matter. The company has also halted negotiations for data center space at a site near Chicago, according to a person familiar with the talks. Microsoft, which has leased excess cloud-computing capacity from CoreWeave Inc., recently backed away from a proposal to obtain more, CoreWeave Chief Executive Officer Michael Intrator said in an interview. Intrator didn't say how many projects were affected or where they're located but added that CoreWeave has found another buyer for the capacity. In some cases, Microsoft is delaying construction. For example, it has paused work on parts of a data center campus it owns about an hour outside of Jakarta, according to people familiar with the situation. Microsoft also has put on hold some planned expansion at a site in Mount Pleasant, Wisconsin, part of a complex visited by then-President Joe Biden, according to another person. During the first six months developing the Wisconsin project, Microsoft spent $262 million on construction, according to documents seen by Bloomberg. Almost $40 million of that went to concrete alone. In other cases, Microsoft has slow-walked negotiations. On a January earnings call, Applied Digital Corp. Chief Executive Officer Wes Cummins told investors that it had been a long process to secure a tenant for a server farm complex in North Dakota. The data center company had originally been in discussions with Microsoft, but talks dragged on so long that an exclusivity clause lapsed, said people familiar with the matter. Applied Digital has since entered into advanced discussions with other players to lease the site. The company secured extra funding from Macquarie Asset Management to continue developing the project and expects it to come online within the next year. "Over the past year, we've learned that the hyperscaler contract process is extremely thorough," Cummins said during the January earnings call. The company declined to comment. In London, Microsoft was negotiating to lease space at Ada Infrastructure's 210-megawatt Docklands data center but has held off on committing to the project, according to people familiar with the matter. The developer is currently showing the site, located a few kilometers down the river from the Canary Wharf financial center, to other potential tenants, the people said. Parent company Ares Management Corp. declined to comment. The Microsoft spokesperson said the company remains committed to its $3.3 billion project in Wisconsin, which is expected to come online next year, and said preliminary work on the expansion has commenced. A company spokesperson in Jakarta said Microsoft's planned Indonesia Central cloud region is on track to go live in the second quarter of 2025, without addressing the pause on portions of the project. Microsoft says it remains committed to spending about $80 billion building out data centers in its fiscal year that ends in June. The company has previously said that the following fiscal year will see a slower rate of new infrastructure spending, and the focus will shift from new construction to fitting out existing facilities with servers and other equipment. Analysts have stepped up their scrutiny of data center spending since Chinese upstart DeepSeek announced in January that it had created a competitive AI service using fewer resources than leading US companies. In the long run, new engineering techniques could mean AI will require less computing power than previously expected. Fueling the skepticism, TD Cowen analysts wrote last week that Microsoft has abandoned new data center projects in the US and Europe that would have amounted to a capacity of about 2 gigawatts of electricity, saying the moves likely represented "data center oversupply relative to its current demand forecast." The analysts said the pullback also reflected Microsoft's choice to forgo some new business from OpenAI, the leading AI startup now valued at $300 billion. OpenAI earlier this year unveiled a joint venture with SoftBank Group Corp. and Oracle Corp. that plans to invest at least $100 billion and as much as $500 billion in AI infrastructure. The same analysts previously said OpenAI is likely shifting some computing from Microsoft to Oracle under that partnership. In late March, Alibaba Group Holding Ltd. Chairman Joe Tsai warned of a potential bubble forming in data center construction, arguing that the pace of the buildout may outstrip initial demand for AI services. CoreWeave's Intrator said that the pullback in data center spending is more specific to Microsoft than the larger industry. "It's pretty localized, and their relationship with OpenAI has just changed," he said. "So it stands to reason that there would be some noise." Ed Socia, a director at the industry intelligence firm datacenterHawk, said cloud companies are tweaking their server farm plans in an effort to cut costs and prioritize projects that can come online quicker. "You may have initially thought one data center project would be the fastest speed to market, but then you realize that the labor, supply chain and power delivery wasn't as quick as you thought," he said. "Then you would have to shift in the short term to focus on other markets." -With assistance from Dina Bass, Gao Yuan, Matt Day, Ben Otto, Olivia Solon and Cindy Wang.

Microsoft says it's 'slowing or pausing' some AI data center projects

AP Technology Writer -- Microsoft said it is "slowing or pausing" some of its data center construction, including a $1 billion project in Ohio, the latest sign that the demand for artificial intelligence technology that drove a massive infrastructure expansion might not need quite as many powerful computers as expected. The tech giant confirmed this week that it is halting early-stage projects on rural land it owns in central Ohio's Licking County, outside of Columbus, and will reserve two of the three sites for farmland. "In recent years, demand for our cloud and AI services grew more than we could have ever anticipated and to meet this opportunity, we began executing the largest and most ambitious infrastructure scaling project in our history," said Noelle Walsh, the president of Microsoft's cloud operations, in a post on LinkedIn. Walsh said "any significant new endeavor at this size and scale requires agility and refinement as we learn and grow with our customers. What this means is that we are slowing or pausing some early-stage projects." Microsoft didn't say Wednesday what other projects it has slowed outside of Ohio, but in late December it revealed it was pausing the later phases of a large data center project in Wisconsin. Analysts with TD Cowen reported earlier this year that Microsoft was also scaling back some of its international data center expansion and canceling some leases in the U.S. for use of data centers operated by other companies. Other analysts for months have tied some of the changes to a shift in Microsoft's close relationship with its business partner OpenAI, maker of ChatGPT. "OpenAI was moving in one direction" by prioritizing the development of ever-more advanced AI systems, which require vast computing resources to train on troves of data, while "Microsoft may not have been moving that same direction," said Craig Ellis, director of research at B. Riley Securities. The two companies announced on Jan. 21 that they were altering the agreement that had made Microsoft the exclusive provider of OpenAI's computing power, enabling the smaller company to build its own capacity, "primarily for research and training of models." It was the same day that newly inaugurated President Donald Trump touted OpenAI's partnership with Oracle and SoftBank to pledge $500 billion in new AI infrastructure in the U.S., starting with a data center in Texas. Microsoft has long built data centers around the world to run its cloud computing services. The generative AI boom accelerated the demand for such facilities, both to train new AI systems and to keep them running as millions of people start using chatbots and other AI tools at work and home. The computing it takes to run AI tools is expensive and requires a large amount of electricity -- so much so that Trump this week cited AI needs as part of the justification for using his emergency authorities to boost the U.S. coal industry, a reliable but polluting energy source. Tech companies have also sought to tap into nuclear power, including a proposed Microsoft-backed revival of the shuttered Three Mile Island plant in Pennsylvania, which would feed an electricity grid supplying data centers in Ohio as well as Virginia, the nation's biggest data center hub. Microsoft said it still plans to spend more than $80 billion globally to expand its AI infrastructure this fiscal year, which ends in June, and has already doubled its data center capacity over the past three years. "While we may strategically pace our plans, we will continue to grow strongly and allocate investments that stay aligned with business priorities and customer demand," Walsh said. The Ohio pause nevertheless came as a disappointment to local officials. Licking County has also attracted data center investments from Microsoft rivals Google and Meta Platforms and a highly anticipated semiconductor factory from Intel, though the struggling chipmaker in February pushed back the expected completion date for the project's first stage to 2030.

Microsoft Says It's 'Slowing or Pausing' Some AI Data Center Projects, Including $1B Plan for Ohio

AP Technology Writer (AP) -- Microsoft said it is "slowing or pausing" some of its data center construction, including a $1 billion project in Ohio, the latest sign that the demand for artificial intelligence technology that drove a massive infrastructure expansion might not need quite as many powerful computers as expected. The tech giant confirmed this week that it is halting early-stage projects on rural land it owns in central Ohio's Licking County, outside of Columbus, and will reserve two of the three sites for farmland. "In recent years, demand for our cloud and AI services grew more than we could have ever anticipated and to meet this opportunity, we began executing the largest and most ambitious infrastructure scaling project in our history," said Noelle Walsh, the president of Microsoft's cloud operations, in a post on LinkedIn. Walsh said "any significant new endeavor at this size and scale requires agility and refinement as we learn and grow with our customers. What this means is that we are slowing or pausing some early-stage projects." Microsoft didn't say Wednesday what other projects it has slowed outside of Ohio, but in late December it revealed it was pausing the later phases of a large data center project in Wisconsin. Analysts with TD Cowen reported earlier this year that Microsoft was also scaling back some of its international data center expansion and canceling some leases in the U.S. for use of data centers operated by other companies. Other analysts for months have tied some of the changes to a shift in Microsoft's close relationship with its business partner OpenAI, maker of ChatGPT. "OpenAI was moving in one direction" by prioritizing the development of ever-more advanced AI systems, which require vast computing resources to train on troves of data, while "Microsoft may not have been moving that same direction," said Craig Ellis, director of research at B. Riley Securities. The two companies announced on Jan. 21 that they were altering the agreement that had made Microsoft the exclusive provider of OpenAI's computing power, enabling the smaller company to build its own capacity, "primarily for research and training of models." It was the same day that newly inaugurated President Donald Trump touted OpenAI's partnership with Oracle and SoftBank to pledge $500 billion in new AI infrastructure in the U.S., starting with a data center in Texas. Microsoft has long built data centers around the world to run its cloud computing services. The generative AI boom accelerated the demand for such facilities, both to train new AI systems and to keep them running as millions of people start using chatbots and other AI tools at work and home. The computing it takes to run AI tools is expensive and requires a large amount of electricity -- so much so that Trump this week cited AI needs as part of the justification for using his emergency authorities to boost the U.S. coal industry, a reliable but polluting energy source. Tech companies have also sought to tap into nuclear power, including a proposed Microsoft-backed revival of the shuttered Three Mile Island plant in Pennsylvania, which would feed an electricity grid supplying data centers in Ohio as well as Virginia, the nation's biggest data center hub. Microsoft said it still plans to spend more than $80 billion globally to expand its AI infrastructure this fiscal year, which ends in June, and has already doubled its data center capacity over the past three years. "While we may strategically pace our plans, we will continue to grow strongly and allocate investments that stay aligned with business priorities and customer demand," Walsh said. The Ohio pause nevertheless came as a disappointment to local officials. Licking County has also attracted data center investments from Microsoft rivals Google and Meta Platforms and a highly anticipated semiconductor factory from Intel, though the struggling chipmaker in February pushed back the expected completion date for the project's first stage to 2030. Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Microsoft says it's 'slowing or pausing' some AI data center projects, including $1 billion plan for Ohio

Microsoft said it is "slowing or pausing" some of its data center construction, including a $1 billion project in Ohio, the latest sign that the demand for artificial intelligence technology that drove a massive infrastructure expansion might not need quite as many powerful computers as expected. The tech giant confirmed this week that it is halting early-stage projects on rural land it owns in central Ohio's Licking County, outside of Columbus, and will reserve two of the three sites for farmland. "In recent years, demand for our cloud and AI services grew more than we could have ever anticipated and to meet this opportunity, we began executing the largest and most ambitious infrastructure scaling project in our history," said Noelle Walsh, the president of Microsoft's cloud operations, in a post on LinkedIn. Walsh said "any significant new endeavor at this size and scale requires agility and refinement as we learn and grow with our customers. What this means is that we are slowing or pausing some early-stage projects." Microsoft didn't say Wednesday what other projects it has slowed outside of Ohio, but in late December it revealed it was pausing the later phases of a large data center project in Wisconsin. Analysts with TD Cowen reported earlier this year that Microsoft was also scaling back some of its international data center expansion and canceling some leases in the U.S. for use of data centers operated by other companies. Other analysts for months have tied some of the changes to a shift in Microsoft's close relationship with its business partner OpenAI, maker of ChatGPT. "OpenAI was moving in one direction" by prioritizing the development of ever-more advanced AI systems, which require vast computing resources to train on troves of data, while "Microsoft may not have been moving that same direction," said Craig Ellis, director of research at B. Riley Securities. The two companies announced on Jan. 21 that they were altering the agreement that had made Microsoft the exclusive provider of OpenAI's computing power, enabling the smaller company to build its own capacity, "primarily for research and training of models." It was the same day that newly inaugurated President Donald Trump touted OpenAI's partnership with Oracle and SoftBank to pledge $500 billion in new AI infrastructure in the US, starting with a data center in Texas. Microsoft has long built data centers around the world to run its cloud computing services. The generative AI boom accelerated the demand for such facilities, both to train new AI systems and to keep them running as millions of people start using chatbots and other AI tools at work and home. The computing it takes to run AI tools is expensive and requires a large amount of electricity - so much so that Trump this week cited AI needs as part of the justification for using his emergency authorities to boost the US coal industry, a reliable but polluting energy source. Tech companies have also sought to tap into nuclear power, including a proposed Microsoft-backed revival of the shuttered Three Mile Island plant in Pennsylvania, which would feed an electricity grid supplying data centers in Ohio as well as Virginia, the nation's biggest data center hub. Microsoft said it still plans to spend more than $80 billion globally to expand its AI infrastructure this fiscal year, which ends in June, and has already doubled its data center capacity over the past three years. "While we may strategically pace our plans, we will continue to grow strongly and allocate investments that stay aligned with business priorities and customer demand," Walsh said. The Ohio pause nevertheless came as a disappointment to local officials. Licking County has also attracted data center investments from Microsoft rivals Google and Meta Platforms and a highly anticipated semiconductor factory from Intel, though the struggling chipmaker in February pushed back the expected completion date for the project's first stage to 2030.

Microsoft Halts Data Center Expansions Due To Semiconductor Tariff Concerns, AI Overcapacity Fears - Microsoft (NASDAQ:MSFT)

In a market dominated by tariff tensions, geopolitical surprises, and Fed uncertainty, Matt Maley's technical approach delivers clear entry/exit points for consistent income potential. Try it free for 7 days Microsoft Corp MSFT has paused discussions and postponed the development of sites in Indonesia, the U.K., Australia, Illinois, North Dakota and Wisconsin, Bloomberg reported, citing unnamed sources familiar with the matter. The stock is trading lower on Friday amid President Donald Trump's semiconductor tariff announcements. Microsoft recently dumped negotiations to lease space between London and Cambridge to host advanced NVIDIA Corp NVDA chips, Bloomberg cited unnamed sources familiar with the matter. Also Read: Microsoft Plans Proprietary AI To Power Business Software And Reduce OpenAI Dependence: Report The company has also halted negotiations for data center space near Chicago. Microsoft recently ditched a proposal to obtain more cloud-computing capacity from CoreWeave, its CEO Michael Intrator, told Bloomberg. Microsoft has paused work on parts of a data center campus near Jakarta. Microsoft has also postponed its planned expansion at a Mount Pleasant, Wisconsin, site. Microsoft has postponed negotiations, including a deal for a server farm complex in North Dakota with Applied Digital Corp APLD and Ada Infrastructure's Docklands data center in London. A Microsoft spokesperson told Bloomberg that Microsoft's $3.3 billion project in Wisconsin will likely come online in 2026. A company spokesperson in Jakarta told Bloomberg that Microsoft's planned Indonesia Central cloud region is on track to go live in the second quarter of 2025. In March, TD Cowen analysts told Bloomberg that Microsoft postponed new data center projects in the U.S. and Europe, signaling potential AI computing overcapacity. In February, the analysts highlighted leases Microsoft had abandoned in the U.S. They described the latest move as the company's choice to forgo some new business from ChatGPT maker OpenAI. TD Cowen's supply chain checks indicated Microsoft's pullback has led to Alphabet Inc.'s GOOG GOOGL Google and Meta Platforms Inc. META to backfill the capacity in international markets. Chinese upstart DeepSeeks's open-source AI model led to Wall Street questioning the sustainability of Microsoft, Meta and Amazon.com Inc.'s AMZN capex outlays on AI models. Microsoft stock is down 11% year-to-date. Reportedly, SoftBank SFTBY SFTBF may become OpenAI's top backer, surpassing Microsoft's $14 billion stake. MSFT Price Action: MSFT stock was down 2.17% at $365 premarket Friday at publication. Read Next: Pony AI Teams Up With Luxembourg Transit Giant to Launch Level 4 Autonomous Vehicle Trials Photo: Shutterstock MSFTMicrosoft Corp$364.91-2.20%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum37.88Growth64.59Quality31.99Value14.54Price TrendShortMediumLongOverviewAMZNAmazon.com Inc$169.36-5.07%APLDApplied Digital Corp$5.45-3.71%GOOGAlphabet Inc$149.65-1.95%GOOGLAlphabet Inc$147.93-1.85%METAMeta Platforms Inc$509.24-4.21%NVDANVIDIA Corp$98.81-2.94%SFTBFSoftBank Group Corp$62.2732.5%SFTBYSoftBank Group Corp$21.49-8.32%Market News and Data brought to you by Benzinga APIs

Microsoft pulls back on data Centres from Chicago to Jakarta

Microsoft Corp. has pulled back on data centre projects around the world, suggesting the company is taking a harder look at its plans to build the server farms powering artificial intelligence and the cloud. The software company has recently halted talks for, or delayed development of, sites in Indonesia, the UK, Australia, Illinois, North Dakota and Wisconsin, according to people familiar with the situation. Microsoft is widely seen as a leader in commercializing AI services, largely thanks to its close partnership with OpenAI. Investors closely track Microsoft's spending plans to get a sense of long-term customer demand for cloud and AI services. It's hard to know how much of the company's data center pullback reflects expectations of diminished demand versus temporary construction challenges, such as shortages of power and building materials. Some investors have interpreted signs of retrenchment as an indication that projected purchases of AI services don't justify Microsoft's massive outlays on server farms. Those concerns have weighed on global tech stocks in recent weeks, particularly chipmakers like Nvidia Corp. which suck up a significant share of data center budgets. Shares of Microsoft are down about 9 per cent this year. Microsoft acknowledged making changes to its data center plans but declined to discuss most of the projects. "We plan our data center capacity needs years in advance to ensure we have sufficient infrastructure in the right places," a spokesperson said. "As AI demand continues to grow, and our data center presence continues to expand, the changes we have made demonstrates the flexibility of our strategy." Microsoft recently withdrew from negotiations to lease space between London and Cambridge in the U.K. at a site being marketed for its ability to host advanced Nvidia chips, according to people familiar with the talks, who requested anonymity to discuss a private matter. The company has also halted negotiations for data center space at a site near Chicago, according to a person familiar with the talks. Microsoft, which has leased excess cloud-computing capacity from CoreWeave Inc., recently backed away from a proposal to obtain more, CoreWeave Chief Executive Officer Michael Intrator said in an interview. Intrator didn't say how many projects were affected or where they're located but added that CoreWeave has found another buyer for the capacity. In some cases, Microsoft is delaying construction. For example, it has paused work on parts of a data center campus it owns about an hour outside of Jakarta, according to people familiar with the situation. Microsoft also has put on hold some planned expansion at a site in Mount Pleasant, Wisconsin, part of a complex visited by then-President Joe Biden, according to another person. During the first six months developing the Wisconsin project, Microsoft spent $262 million on construction, according to documents seen by Bloomberg. Almost $40 million of that went to concrete alone. In other cases, Microsoft has slow-walked negotiations. On a January earnings call, Applied Digital Corp. Chief Executive Officer Wes Cummins told investors that it had been a long process to secure a tenant for a server farm complex in North Dakota. The data center company had originally been in discussions with Microsoft, but talks dragged on so long that an exclusivity clause lapsed, said people familiar with the matter. Applied Digital has since entered into advanced discussions with other players to lease the site. The company secured extra funding from Macquarie Asset Management to continue developing the project and expects it to come online within the next year. "Over the past year, we've learned that the hyperscaler contract process is extremely thorough," Cummins said during the January earnings call. The company declined to comment. In London, Microsoft was negotiating to lease space at Ada Infrastructure's 210-megawatt Docklands data center but has held off on committing to the project, according to people familiar with the matter. The developer is currently showing the site, located a few kilometers down the river from the Canary Wharf financial center, to other potential tenants, the people said. Parent company Ares Management Corp. declined to comment. The Microsoft spokesperson said the company remains committed to its $3.3 billion project in Wisconsin, which is expected to come online next year, and said preliminary work on the expansion has commenced. A company spokesperson in Jakarta said Microsoft's planned Indonesia Central cloud region is on track to go live in the second quarter of 2025, without addressing the pause on portions of the project. Microsoft says it remains committed to spending about $80 billion building out data centers in its fiscal year that ends in June. The company has previously said that the following fiscal year will see a slower rate of new infrastructure spending, and the focus will shift from new construction to fitting out existing facilities with servers and other equipment. Analysts have stepped up their scrutiny of data center spending since Chinese upstart DeepSeek announced in January that it had created a competitive AI service using fewer resources than leading US companies. In the long run, new engineering techniques could mean AI will require less computing power than previously expected. Fueling the skepticism, TD Cowen analysts wrote last week that Microsoft has abandoned new data center projects in the US and Europe that would have amounted to a capacity of about 2 gigawatts of electricity, saying the moves likely represented "data center oversupply relative to its current demand forecast." The analysts said the pullback also reflected Microsoft's choice to forgo some new business from OpenAI, the leading AI startup now valued at $300 billion. OpenAI earlier this year unveiled a joint venture with SoftBank Group Corp. and Oracle Corp. that plans to invest at least $100 billion and as much as $500 billion in AI infrastructure. The same analysts previously said OpenAI is likely shifting some computing from Microsoft to Oracle under that partnership. In late March, Alibaba Group Holding Ltd. Chairman Joe Tsai warned of a potential bubble forming in data center construction, arguing that the pace of the buildout may outstrip initial demand for AI services. CoreWeave's Intrator said that the pullback in data center spending is more specific to Microsoft than the larger industry. "It's pretty localized, and their relationship with OpenAI has just changed," he said. "So it stands to reason that there would be some noise." Ed Socia, a director at the industry intelligence firm datacenterHawk, said cloud companies are tweaking their server farm plans in an effort to cut costs and prioritize projects that can come online quicker. "You may have initially thought one data center project would be the fastest speed to market, but then you realize that the labor, supply chain and power delivery wasn't as quick as you thought," he said. "Then you would have to shift in the short term to focus on other markets."

Microsoft slows global data center expansion - Bloomberg By Investing.com

Investing.com -- Microsoft Corp (NASDAQ:MSFT). is reportedly scaling back its worldwide data center projects, indicating a more thorough examination of its plans to construct server farms that support artificial intelligence and cloud services. Recent actions by the software company show a pause in discussions or postponement of development for sites in several locations globally. These include Indonesia, the UK, Australia, Illinois, North Dakota, and Wisconsin, Bloomberg report said, citing people familiar with the matter. These server farms are crucial infrastructure for the operation of artificial intelligence technologies and cloud-based services. The decision to slow down the expansion of these data centers suggests a change in Microsoft's approach to its global infrastructure development.

Microsoft taps brakes on data center buildout in U.S. and abroad - BBG By Investing.com

Investing.com -- Microsoft (NASDAQ:MSFT) has scaled back or delayed a series of data center projects globally, signaling a more measured approach to building the infrastructure that powers its AI and cloud services, according to a Bloomberg report. The company has recently halted negotiations or paused development in multiple locations, including Indonesia, the UK, Australia, Illinois, North Dakota, and Wisconsin, Bloomberg said, citing people familiar with the matter. While Microsoft is seen as a frontrunner in commercializing artificial intelligence -- largely through its partnership with OpenAI -- the company's infrastructure spending plans are closely watched by investors as an indicator of long-term demand. The recent pullback has raised questions about whether Microsoft is adjusting to short-term construction bottlenecks or reassessing demand projections for AI services. Some investors view the slowdown as a warning that expected customer spending may not justify the company's current level of investment in server farms. That sentiment has added pressure to tech stocks with exposure to AI infrastructure. Microsoft shares are down over 9% this year. The tech behemoth acknowledged that it has revised some of its data center planning, without offering specifics. "We plan our data center capacity needs years in advance to ensure we have sufficient infrastructure in the right places," a spokesperson said. "As AI demand continues to grow, and our data center presence continues to expand, the changes we have made demonstrates the flexibility of our strategy." In the UK, Microsoft exited negotiations for a site between London and Cambridge that was being marketed for advanced Nvidia (NASDAQ:NVDA) chip deployments. In the U.S., it pulled out of a deal for space near Chicago and put on hold some expansion at its Mount Pleasant, Wisconsin campus, which had previously drawn political attention. The company also paused construction at a site near Jakarta and took a slower approach to talks with Applied Digital over a facility in North Dakota. Per Bloomberg, delays there eventually led to the expiration of an exclusivity clause. Microsoft has also stepped back from a proposal to lease additional cloud capacity from CoreWeave (NASDAQ:CRWV), though the supplier has since secured another buyer. In London, Microsoft was in talks to lease space at Ada Infrastructure's 210-megawatt Docklands facility but has yet to commit to the project, the report said. The site is now being offered to other prospective tenants.