TD Cowen noticed Microsoftdoing something strangeon Friday.
The Open AI partner and tech giant appeared to be cancelling data center leases.
According to the market analysts, this is part of a wider pattern.
The Microsoft China headquarters building in Xuhui Caohejing Development Zone in Shanghai, China, December 8, 2024. (Photo credit should read CFOTO/Future Publishing via Getty Images)©CFOTO/Future Publishing via Getty Images
TD Cowen said Microsoft had an oversupply problem.
Its another datapoint that points to Big Techs nervousness around its big bet on AI.
It could be a negotiation tactic or it could be a sign of a wider market shift.
The leases arent the only sign that Microsoft is cooling down its AI spend.
Hes deregulating AI but hes also making everything more expensive.
When the world becomes more uncertain, companies spend less.
In January Microsoft promised that it would spend $80 billion ondata centers in America.
Microsoft has a hand in Open AI, which makes the popular ChatGPT.
But it also owns CoPilot, a service its been trying to force on Windows and Office users.
It runs Bing, an also-ran search engine thats incorporating more and more AI slop that everyone also hates.
CEO Satya Nadellapumped the brakeson AI hype in a podcast appearance last week, too.
According to TD Cowen, the signals all point to a reduction in AI-related spending from Microsoft.
Microsoft pushed back on some of this later when it talked to the business press.
Its unclear how much demand there actually is for massive data centers and the large language models they support.
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Two banks say Amazon has paused negotiations on some international data centers.
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