Microsoft (MSFT.O) has abandoned data center projects in the U.S. and Europe, representing up to 2 gigawatts of planned electricity consumption, according to recent analysis by TD Cowen.
The analysts, led by Michael Elias, noted significant adjustments in the tech giant’s approach, including delays and cancellations of existing data center leases in both regions over the past six months. This strategic shift primarily stems from Microsoft’s decision to reduce support for additional training workloads from OpenAI, the creator of ChatGPT.
Investor sentiment surrounding the substantial artificial intelligence investments by U.S. tech firms has become more cautious. Concerns have grown due to slower-than-anticipated returns on investment and the emergence of competitors like the Chinese startup DeepSeek, which has demonstrated AI technology at a more competitive cost compared to Western rivals.
TD Cowen’s supply chain investigations suggest that Microsoft’s pullback has created opportunities for other tech firms. Alphabet (GOOGL.O) is reportedly increasing capacity in international markets, while Meta Platforms (META.O) is doing the same in the United States.
Microsoft, which has earmarked over $80 billion for investments in AI and cloud capacity this fiscal year, did not respond to a request for comment.
Earlier in February, TD Cowen analysts indicated that Microsoft had already abandoned leases totaling “a couple of hundred megawatts” of capacity with at least two private data center operators.
