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Microsoft pulls back on AI data center spending

Feb 25, 2025, 6:29am EST
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A view shows a Microsoft logo at Microsoft offices in Issy-les-Moulineaux near Paris, France
Gonzalo Fuentes/File Photo/Reuters

Microsoft canceled some leases for artificial intelligence data center capacity in the US, as investors grow skeptical over the billions Big Tech is pouring into AI infrastructure.

A report from brokerage TD Cowen suggests a possible AI computing oversupply at the US tech giant, amid broader concerns about companies overestimating long-term AI demand.

Many US and Chinese firms have gone all in on AI: OpenAI and other firms promised $500 billion for a joint AI infrastructure project, Stargate, meant to kickstart a new American “golden age,” at US President Donald Trump’s inauguration. Meanwhile, Alibaba said that it will spend more than $53 billion on projects like data centers over the next three years — the most ever spent by a private Chinese company on AI hardware.

The push is a “speculative, risky gamble” in the pursuit of artificial general intelligence, Bloomberg analysts said.

A chart showing the top ten countries by private investment in AI, 2023.
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