Microsoft AI Data Center Project Halted! TD Cowen and Charles Cai Warn: AI Infrastructure Oversupply Concerns

03/27/2025

Microsoft Gradually Exits and Delays AI Data Center Projects in Europe and America

In recent months, Microsoft has been gradually exiting and delaying its AI data center projects in Europe and America. International investment bank TD Cowen speculates that the reasons behind this move include resource reallocation and a warning of “oversupply.” Following the news, the market experienced turbulence, leading to declines in tech stocks including Nvidia, Meta, and Alphabet.

TD Cowen Reveals Microsoft’s Cancellation of 2GW Data Center Projects

According to Bloomberg, TD Cowen pointed out that Microsoft has been withdrawing from new data center projects in Europe and America with a total capacity of approximately 2GW over the past six months. These facilities were originally planned to support the explosive demand for AI computing, but now, due to a possible “oversupply” in the market, Microsoft has decided to hit the brakes.

As early as February this year, TD Cowen indicated that Microsoft had already canceled some land leases in the United States, which drew market attention. Now, with the announcement of a new wave of cancellations and delays in projects, it shows that Microsoft has begun to adjust its layout.

Microsoft Claims Strategic Adjustments and Reallocation of Funds

In response, a Microsoft spokesperson stated that the company had actually set a record for the largest increase in data center capacity last year, and is now making strategic adjustments in certain regions, emphasizing that “growth will continue in all areas.”

Microsoft plans to invest approximately $80 billion in building AI data centers this fiscal year (ending in June), but expansion may slow in the next fiscal year as funds are redirected toward internal upgrades and equipment deployment.

Microsoft Abandons Some Cloud Business with OpenAI, Other Players Seize the Opportunity

This wave of delays includes not only project cancellations but also a shift in the collaboration model with OpenAI. Although Microsoft has invested about $13 billion to support OpenAI, the two parties modified their agreement earlier this year, allowing OpenAI to utilize resources from other cloud service providers if Microsoft chooses not to take the deal.

This indicates that Microsoft does not intend to “fully absorb” all of OpenAI’s needs, but rather chooses to strategically allocate resources and focus on projects they deem more valuable.

Google and Meta Take Advantage of Vacated Leases in Europe

The TD Cowen report also noted that some of Microsoft’s canceled leases in Europe have been picked up by Google and Meta. However, this also reflects a market reshuffle, where not every company rushes to build, but instead makes choices based on their own needs.

Tech Stocks Decline as Market Worries About Oversupply

With the release of this report, tech stocks immediately fell:

Microsoft: down 1.31%
Meta: down 2.45%
Alphabet: down 3.27%
Nvidia: down 5.74%

Alibaba’s Joe Tsai also pointed out that the construction of AI data centers might lead to a bubble, with future supply potentially far exceeding the actual demand for AI services.

Cancellations of Leases Signal Oversupply in Data Centers

Finally, the TD Cowen team emphasized that Microsoft’s recent cancellations of leases and delays in expansion send a clear signal: the current supply of data centers in the market has exceeded the actual demand for AI computing in the short term, reminding investors to be cautious of bubble risks.

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