Pullback apparently follows the tech giant’s decision not to take on additional training workloads for OpenAI, owner of ChatGPT in which Microsoft has invested almost $14bn
Reuters has reported that in the last six months Microsoft has abandoned plans to lease data centres in Europe and the US as they would be surplus to its demand forecast.
The news agency cited an analyst team at TD Cowen which suggested pulling back from the proposed leases followed Microsoft’s decision not to support additional training workloads from ChatGPT maker OpenAI. Microsoft has invested almost ¢14 billion in OpenAI by the end of 2024.
Supply chain analysts from investment bank TD Cowen said in February that Microsoft had scrapped leases totalling “a couple of hundred megawatts” of capacity with at least two private data centre operators.
In response to those comments by TD Cowen, Microsoft stated that although it could “strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions”. It also said it still intends to spend $80 billion on AI infrastructure in this fiscal year.
Investors’ get cold feet
Investors are less ebullient about spending on AI as returns on investment have been slow and less than some expected. China’s DeepSeek also punctured investors’ confidence in the sector in January when it demo’d tech that seemed to rival that developed in Western countries at a fraction of the cost.
Now Reuters says that Microsoft’s retreat has resulted in Google stepping into the breach to provide more capacity in markets outside the US, while Meta Platforms is providing more in the US, according to TD Cowen’s supply chain checks.
Alphabet, which owns Google, has said it will spend $75 billion on its AI infrastructure this year, almost a third more (29%) more than Wall Street expected, while Meta has committed up to $65 billion.
