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Microsoft cancels leases for AI data centers, analyst says
- bob1029 2y ago> a couple of hundred megawatts. So, something approximating an entire region or 10~100k H100s.
- decimalenough 2y agoNot surprised. You need massive amounts of compute for training LLMs from scratch, but practical uses of LLMs are increasingly focused on using existing models with minimal or no tweaks, which requires far less computing power.
- belter 2y agoI would like to note Bloomberg pulls these types of FUD before every NVDA earnings release. The last one they did was the false reports on Blackwell technical issues. They have been doing it for years "Bloomberg fined €5m over report of fake news release" - https://www.ft.com/content/32013b6a-202f-11ea-b8a1-584213ee7b2b https://www.ft.com/content/32013b6a-202f-11ea-b8a1-584213ee7... "Supermicro Statement on Bloomberg’s Claims" - https://www.supermicro.com/en/pressreleases/supermicro-statement-bloombergs-claims https://www.supermicro.com/en/pressreleases/supermicro-state... After Bloomberg reported a subpoena was sent to Nvidia and other unnamed technology companies... "Nvidia Denies It Was Subpoenaed In Justice Department Antitrust Probe" - https://www.forbes.com/sites/antoniopequenoiv/2024/09/04/nvidia-denies-it-was-subpoenaed-in-justice-department-antitrust-probe/ https://www.forbes.com/sites/antoniopequenoiv/2024/09/04/nvi...
- intended 2y agoI’ve worked in equity research, and an accusation of FUD is an accusation of intentionally malign behavior. Getting reporting wrong is not the same as FUD.
- mvdtnz 2y agoWhen you double down on the incorrect reporting instead of retracting or correcting it, as Bloomberg did with their ludicrous spy chip story, it becomes FUD regardless of your initial intent.
- intended 2y agoTo what purpose? Enron spread FUD to further its goals. We can INVENT goals here, to FIT the conclusion we have already reached - that Bloomberg is spreading FUD. But this is because we have already concluded, and are now finding things to fit our conclusion.
- belter 2y ago"Years later, Bloomberg doubles down on disputed Supermicro supply chain hack story" - https://www.datacenterdynamics.com/en/news/years-later-bloomberg-doubles-down-disputed-supermicro-supply-chain-hack-story/ https://www.datacenterdynamics.com/en/news/years-later-bloom...
- intended 2y agoSorry I forgot. Yes, this is absolutely FUD. This is the insistence to spread FUD for … some uncertain aim. Perhaps it hitting all these various firms, in order to leverage their strong reputation, to cause the price to drop, allowing someone - perhaps Bloomberg himself, to make a profit off of it. No no, I know I sound like a conspiracy theorist now. But my eyes were opened by the sharing of the story. The fact that FT, WSJ, Fox or a million other sites haven’t latched onto this obvious scheme, is heinous, and once again a sign of our completely captured media.
- suraci 2y agoThis is indeed worth noting. Bloomberg seems to be a player in the market, or at least it is affected by players in the market. It always publishes news in good rhythm with the market. this article is just a reference, still need to wait for Microsoft's announcement
- isoprophlex 2y agoso, historically speaking, who should i short? ;)
- kjw 2y agoCompletely agree with you re: Bloomberg's somewhat shady history of reporting. However, in this case, the article is citing a research note written by TD Cowen equity research analysts. For example, here's another article from MarketWatch citing this same research note -- https://www.marketwatch.com/story/the-research-note-thats-raising-eyebrows-microsoft-reportedly-is-cancelling-data-center-leases-0e69b0e0 https://www.marketwatch.com/story/the-research-note-thats-ra... Leads me to lend more credence to the news even though OP is linking Bloomberg.
- deleted 2y ago[deleted]
- bayesianbot 2y agohttps://archive.is/dWo55 https://archive.is/dWo55
- drexlspivey 2y agoI guess Satya is not good for his $80B (for project Stargate) any more.
- fny 2y agoHe is: this refers to spending Microsoft had planned on its own outside of Stargate. It says so in the article.
- skywhopper 2y agoIn other words “Stargate” is itself a lie: no new spending, just a political repackaging of existing plans.
- _heimdall 2y agoThat's nothing new, politicians lie all the time. Everyone's response when a politician announcing some supposed massive spending program should be to say "show me the appropriation bill and receipts, then we can talk."
- shigawire 2y agoAppropriation bills don't go as far as they used to anymore as well...
- fny 2y agoMicrosoft has committed $100B to Stargate. These cuts are meaningless by comparison.
- laserbeam 2y agoI've read the first 2 paragraphs 5 times and I still can't tell if Microsoft was renting datacenters and paying for them, or if Microsoft was leasing out datacenters and decided "no more AI data centers for you, 3rd parties". And digging further into the article didn't help either.
- walrus01 2y agoThe first one, they were acquiring datacenter space.
- ffjffsfr 2y agokey piece of info at the end, looks like they are leaving the spending on datacenter to OpenAI > Microsoft’s alliance with OpenAI may also be evolving in ways that mean the software giant won’t need the same kind of investments. In January, OpenAI and SoftBank Group Corp. announced a joint venture to spend at least $100 billion and perhaps $500 billion on data centers and other AI infrastructure.
- jimmySixDOF 2y agoIn a recent Dwarkesh podcast this week Nadella was just commenting on how they expected to benefit from reduced DC rental pricing and were preparing for Jevon's paradox to max out capacity. I guess they are calculating a ceiling now.
- zkmon 2y agoThe hype starts to head down towards reality.
- smetj 2y agoNo it's one level deeper. The exclusive claim to the "hype" is heading down towards reality.
- fny 2y agoHere’s the TD Cowen research note: https://www.threads.net/@firerock31/post/DGbK1VkyKlp/in-latest-report-td-cowen-report-that-microsoft-has-canceled-certain-us-data-cen https://www.threads.net/@firerock31/post/DGbK1VkyKlp/in-late...
- helsinkiandrew 2y agoMeanwhile: "Apple Says It Will Add 20k Jobs, Spend $500B, Produce AI Servers in US" https://www.bloomberg.com/news/articles/2025-02-24/apple-says-it-will-add-20-000-jobs-spend-500-billion-produce-ai-servers-in-us https://www.bloomberg.com/news/articles/2025-02-24/apple-say... https://news.ycombinator.com/item?id=43158168 https://news.ycombinator.com/item?id=43158168
- numbsafari 2y agoThis has nothing to do with supply/demand, and everything to do with geopolitics.
- FrustratedMonky 2y agoYou think they would spend 500B without thinking there will be any demand?
- rsynnott 2y agoYou're missing the key phrase. "Says it will". Companies, of course, say all sorts of things. Sometimes, those things come to pass. But not really all that often.
- slashdev 2y agoApply said the same thing the last two election cycles. They seem to be eternally indicating they're investing multiple hundreds of billions in the US. What they actually followed through on, is what I want to know.
- dboreham 2y agoThe 500B is just something to put on a press release.
- sangnoir 2y agoIt cost Apple $0 to say they'll spend $500B.
- qgin 2y agoA few things from the Dwarkesh interview with Satya: * He sees data center leases getting cheaper in near future due to everyone building * He’s investing big in AI, but in every year there needs to be a rough balance between capacity and need for capacity * He doesn’t necessarily believe in fast takeoff AGI (just yet) * Even if there is fast takeoff AGI, he thinks human messiness will slow implementation * It won’t be a winner-take-all market and there will be plenty of time to scale up capacity and still be a major player
- djtango 2y ago> Even if there is fast takeoff AGI, he thinks human messiness will slow implementation Five years ago during covid all these clunky legacy businesses couldn't figure out a CSV let alone APIs but suddenly with AGI they are going to become tech masters and know how to automate and processize their entire operations? I found it very amusing that at the turn of the decade "digitalisation" was a buzzword as Amazon was approaching its 25th anniversary. Meanwhile huge orgs like the NHS run on fax and was crippled by excel row limits. Software made a very slow dent in these old important slow moving orgs. AI might speed up the transition but I don't see it happening overnight. Maybe 5 years if we pretend smartphone adoption is indicative of AGI and humanoid robot rollout
- qwertox 2y ago> Meanwhile huge orgs like the NHS run on fax I thought this was a German-only thing?
- ta1243 2y agoNot convinced. In 2018: https://www.gov.uk/government/news/health-and-social-care-secretary-bans-fax-machines-in-nhs https://www.gov.uk/government/news/health-and-social-care-se... > Matt Hancock has banned the NHS from buying fax machines and has ordered a complete phase-out by April 2020. The NHS is quite federated. Hell many parts of it are independent companies. Some trusts have decent modern systems though - I had to go for a test just before christmas - I'd phoned up my GP in the morning got an appointment for half an hour later, he ordered a test, said go to one of these 8 centres, so I went to one about half an hour away (I live a fair way away from a major town). Had the test, by the time I'd had lunch and driven back home I had another call from the GP asking me to come in that evening, the appointment was created by the GP and read seconds later at the hospital, the test was done there and results reported back again at the click of a system at the GP. But that's just my local trust. Go 10 miles west and it's another trust and they have different systems. And I had to go to one of the test centres in the trust, I couldn't go to one in a neighbouring trust as they have different systems and there's no/limited interconnects.
- toomuchtodo 2y agoMicrosoft CEO Admits That AI Is Generating Basically No Value - https://futurism.com/microsoft-ceo-ai-generating-no-value https://futurism.com/microsoft-ceo-ai-generating-no-value Bit of a click bait title, but it certainly seems like the realization is setting in that the hype has exceeded near term realistic expectations and some are walking back claims (for whatever reason; honesty, derisking against investor securities suits, poor capital allocation, etc). Nadella appears to be the adult in the room, which is somewhat refreshing considering the broad over exuberance.
- bognition 2y agoTime to sort NVDA?
- toomuchtodo 2y agoA fellow degenerate gambler I see. The market can remain irrational longer than you can remain solvent, trade with caution. Being early is the same as being wrong.
- short_sells_poo 2y agoHighly regarded people unite :D More seriously though: unless you have privileged information or have done truly extensive research, do not short stocks. And if you do have privileged information, still don't short stocks because unless you have enough money to defend yourself against insider trading like Musk and it's ilk, it's not going to be worth it. It's perfectly reasonable to determine that a particular high growth stock is not going to perform as well going forward, in which case I'd shift allocation to other, better candidates. Generally, being long equities is a long term positive expected value trade. You don't have to time the market, just be persistent. On the other hand, as you correctly alluded to, shorting equities requires decently precise timing, both on entry and exit.
- bognition 2y agoA common hypothesis for why Nvidia is so hot is because they have an effective monopoly on the hardware to train AI models and it requires a crap ton of hardware. With DeepSeek it’s been demonstrated you can get pretty damn for a lot cheaper. I can only imagine that there are tons of investors thinking that it’s better to invest their dollars in undercutting the costs of new models vs investing billions in hardware. The question is, can Nvidia maintain their grip on the market in the face of these pressures. If you think they can’t, then a short position doesn’t seem like that big of a gamble.
- m00dy 2y agowhat happened to Jevons paradox then ?
- orzig 2y agoRemember that there is a lot of nuance to these sorts of deals. I don’t have any domain knowledge, but I recently saw an executive put in restaurant reservations for five different places the night of our team offsite, so he would have optionality. An article could accurately claim that he later canceled 80% of the teams eating capacity!
- ZeroGravitas 2y agoBut if it was reported in the press that your team was going to eat 5 meals at the same time before it was revealed that it was just an asshole screwing over small businesses, then that correction in eating capacity should be reported.
- FrustratedMonky 2y ago"should " But often not. That was the point in the parent. How this is being reported is bit skewed. And also there is the problem that nobody reads corrections. Lies run around the globe before the Truth has tied its shoelaces, or some quote like that.
- smetj 2y ago> Wall Street stepped up its questions about the massive outlays after the Chinese upstart DeepSeek released a new open-source AI model that it claims rivals the abilities of US technology at a fraction of the cost. And that's the crux of it and that's also why DeepSeek was such a big deal.
- everfrustrated 2y agoThis could simply be datacenter deals started years ago that they are pulling out of now they have larger AI-optimized DC's being commissioned in places more suited to faster & larger power availability.
- deleted 2y ago[deleted]
- strangescript 2y agoOpenAI is pivoting away from MS. MS also has their own internal AI interests. Need to frame this for investors that doesn't look like we are losing out. "Nadella doesn't believe in AI anymore". Done and done.
- blonderoast 2y agoa lot of this sounds like a normal course of business and stuff that msft does all the time. i don't understand the openai drama speculation on here. msft continues to have right of first refusal on openai training and exclusivity on inferencing. if someone else wants to build up openai capacity to spend money on msft for inferencing, msft would be thrilled. they recognize revenue on inferecing not training at the moment, so it's all upside to their revenue numbers
- feverzsj 2y agoSeems consumers just hate every product with AI functionality.
- lompad 2y agoMore like consumers hate every product where AI gets shoved in their face without any thought and -- Okay, maybe you're right.
- boshalfoshal 2y agoThe consumer market doesnt matter much here, imo. I think most companies know b2b is the most lucrative segment for AI because it reduces one of their top costs - people. Companies selling AI are basically just selling the ultimate automation tool, which (in theory) is massive value for companies. Having a nice consumer product is a side gig.
- jr-ai-interview 2y agoIt's sad, people are already recklessly rearranging business logic via AI in key medical software systems due to global outsourcing linguistic reasons. I have so much intense hatred for pg and Sama right now I rarely come to this shit show of a site
- jr-ai-interview 2y agoSurely smart people exists, right?
- nokun7 2y agoSo, Microsoft’s move to ditch leases for “a couple hundred megawatts” of data center capacity, as noted in TFA, is a pretty intriguing shift—and it’s not just a random cutback. Per some reports from Capacity Media and Analytics India Magazine, it looks like they’re pulling some of their international spending back to the U.S. and dialing down the global expansion frenzy. For context, that “couple hundred megawatts” could power roughly 150,000 homes, (typical U.S. energy stats) so it’s a decent chunk of capacity they’re letting go. IMO it's not a full-on retreat—Microsoft’s still on track to drop $80 billion this fiscal year on AI infrastructure, as they’ve reaffirmed. But there’s a vibe of recalibration here. They might’ve overcooked their AI capacity plans, especially after being the top data center lessee in 2023 and early 2024. Meanwhile, OpenAI—Microsoft’s big AI partner—is reportedly eyeing other options, like Project Stargate with SoftBank, which could handle 75% of its compute needs by 2030 (per The Information report). That’s a potential shift in reliance that might’ve spooked Microsoft into rethinking its footprint. Also it seems they're redirecting at least some costs - over half that $80 billion is staying stateside, per Microsoft’s own blog, which aligns with CEO Satya Nadella’s January earnings call push to keep meeting “exponentially more demand.” It’s a pragmatic flex—trim the fat, dodge an oversupply trap, and keep the core humming. Whether it’s genius or just good housekeeping, it shows even the giants can pivot when the AI race gets too hot.
- deleted 2y ago[deleted]
- fabiofzero 2y agoYikes
- tsunego 2y agoNo stargate?
- rcleveng 2y agoMaybe stargate is the reason why MS doesn't need these leases?
- meindnoch 2y agoIt's already done. Their AI is self-evolving now. No need for data centers anymore.
- ivalm 2y agoI don’t think they are a compute partner for stargate.
- w0m 2y agoIIRC, MS has right-of-first-refusal on providing any new/necessaary compute for stargate. But also iirc; Stargate was well along before trumps horse/pony show also no idea how much is still necessary to purchase.
- consumer451 2y agoRelated discussion on reddit: https://old.reddit.com/r/stocks/comments/1ix27vd/microsoft_cancels_some_data_center_leases_td/ https://old.reddit.com/r/stocks/comments/1ix27vd/microsoft_c...
- packetlost 2y agoMan, bubble popping already?
- cgcrob 2y agoYep. Investors are shifting capital out of the market. Always happens. The little guys end up paying for the losses.
- Aurornis 2y agoBy itself this doesn’t mean much. If they’re reallocating funds to different data centers or building their own then this could be a wash.
- m3kw9 2y agoIt’s additive math, is the overall plus or minus. There is always gonna be some push and pull. “ TD Cowen posited in a second report on Monday that OpenAI is shifting workloads from Microsoft to Oracle Corp. as part of a relatively new partnership. The tech giant is also among the largest owners and operators of data centers in its own right and is spending billions of dollars on its own capacity. TD Cowen separately suggested that Microsoft may be reallocating some of that in-house investment to the US from abroad”
- josefritzishere 2y agoIs the AI Bubble already popping?
- kittikitti 2y agoDo you think Big Tech will go down when it does or will it further consolidate and centralize power?
- bluefirebrand 2y agoGiven how things go when past bubbles have popped, this is likely to be "both" I think. Just not all at once When the bubble pops you see things collapse Then it becomes a feeding frenzy as companies and IPs get bought up on the cheap by whoever has a bit of money left When the dust clears, some old players are gone, some are still around but weaker, some new players have emerged that resemble conglomerates of the old players, but overall a lot of the previous existing power is consolidated into fewer hands
- elif 2y agoI doubt it. MS has what they need in oAI partnership. I think this is more likely just a reflection of the broader economic environment. Going into a recession, cut investment, try to retain as much talent as you can afford to for the next few years.
- DisjointedHunt 2y agoOld news and incorrect the way it is phrased : https://x.com/dylan522p/status/1894050388145508586 https://x.com/dylan522p/status/1894050388145508586 I'm not sure why there is so much poor reporting on accelerator demand recently, it seems there are a lot of people looking to sell a message that isn't grounded in reality.
- 01100011 2y agoQuite a lot of money is at stake in the control for retail investors' minds. Lots of stupid takes get amplified by people who lack background. Look at the recent Intel/TSMC/Broadcom merger rumors. The story was "Canada could join the US" level of stupid to anyone with experience anywhere near chip fabrication but it still circulated for several days. Also, look at what it did to the stock price of INTC. Lots of money made and lost there.
- PeterStuer 2y agoMicrosoft said they were going to spend 80 Billion on AI data centers, and they confirmed this again, so there is no 'scaling back'. Speculation: I suspect after they observed the incredible speed with which Grok was able to build out a leading edge AI infrastructure themselves in Memphis, far faster than what the traditional data-centers could offer it, Microsoft might have had an epiphany and went 'wait, why are we not doing this?'
- topaz0 2y ago"Why aren't we polluting a poor disenfranchised population with the cheapest, dirtiest solution we can find?"
- mistrial9 2y agosomehow, Memphis, an ancient Egypt royal center and core of a grand imperial slave state.. is such a fitting name for these developments
- kragen 2y agoAncient Egypt was neither imperial nor a slave state; though it did have slavery, most Egyptians were not slaves.
- mistrial9 2y agohttps://en.wikipedia.org/wiki/Slavery_in_Egypt https://en.wikipedia.org/wiki/Slavery_in_Egypt https://en.wikipedia.org/wiki/Slavery_in_ancient_Egypt https://en.wikipedia.org/wiki/Slavery_in_ancient_Egypt
- kragen 2y agoThese pages are somewhat out of date, but they confirm what I said: "Ancient Egypt was a peasant-based economy and it was not until the Greco-Roman period that slavery had a greater impact."
- aresant 2y ago- This is a proper MSFT resource allocation commentary, not an industry wide canary in coalmine - MSFT CapEx is up 45% YoY, positioning for inference dominance - MSFT is prioritizing AI inference for millions of customers over massive AI training for OpenAI - Losing inference demand risks clients moving to AWS/GCP - MSFT taking bet that industry overbuild will lead to more attractive leasing terms in future vs owning - OpenAI chases AGI; MSFT chases scalable, affordable AI that drives Azure adoption - Leadership is risk adjusted - they win if OpenAI succeeds, and win if open-source wins
- MichaelZuo 2y agoIf they are taking the bet that industry will overbuild, how is it not a canary in a coal mine? There is almost certainly at least one person in Redmond working on this that’s smarter and better informed than you, just going off probability.
- outside1234 2y agoOr that person is this person
- snapcaster 2y ago>There is almost certainly at least one person in Redmond working on this that’s smarter and better informed than you, just going off probability. this isn't the actual test though right? it's surely true, and yet companies make bad decisions all the time. It needs to be conditioned on "someone smarter and better informed than you _with influence in the organization sufficient to enact change_"
- protocolture 2y agoYeah the guy who designed the Courier for Microsoft was smarter and better informed than me, the problem is he was smarter and better informed than his leadership at microsoft who canned the project in favour of doing nothing, messing around with nokia, and ending up with a watered down product years too late in terms of the surface.
- iainctduncan 2y agoThe thing that is driving me crazy in all these threads is that we have invariably a bunch of programmers saying "I use it for coding and I would never go back" but this is orthoganal to the question of whether it's a good business. If you use gen-AI but don't pay the real cost, you're not really a data point on the economics of it. It could be useful to programmers and still be a terrible business if the cost of giving you that usefulness is more than you (or your employer) would pay.
- Valord 2y agoMy impression is that costs will continue to go down. Large investments are unlikely to be profitable for these businesses. Whoever is dumping billions into this is unlikely to get their money back. The new tooling, models, discoveries seem to be commoditized within months. There are no moats. If things keep going this way there will never be a point where employers (or anybody for that matter) have to pay the real cost.
- gcnnbdff 2y ago[dead]
- crowcroft 2y agoMy theory: - OpenAI and Oracle partnership: When Microsoft is 'at capacity' more demand can go to Oracle, so now Microsoft don't need to rapidly add capacity with leases (which likely have a lower ROI than Microsoft owned and operated centres). - Longer term investments are still going ahead: Microsoft aren't cutting back on capex investment. They don't want to lease if they don't have to, but long term still see a huge market for compute that they will want to be a key supplier of. I think Microsoft's goal here is to focus on expanding their capex to be a long term winner instead of chasing AI demand at any cost in the short term. Likely because they already think they're in a pretty strong position already.
- light_triad 2y agoMakes sense given what Nadella recently said: - Self claiming some AGI milestone is "non-sensical benchmark hacking" - The AI model race won't be winner-take-all - The real benchmark is if the world is growing at 10% MSFT is putting its focus on AI adoption in the app layer and "at-scale consumer properties" Full conversation: https://www.youtube.com/watch?v=4GLSzuYXh6w https://www.youtube.com/watch?v=4GLSzuYXh6w
- ingen0s 2y agoMy theory is it has something to do with the new quantum tech and contrived.
- havercosine 2y agoI'm honestly in two minds on this one. On one hand, I do agree that valuations have run a bit too far in AI and some shedding is warranted. A skeptical position coming from a company like MSFT should help. On the other hand, I think MSFT was trying to pull a classic MSFT on AI. They thought they can piggyback on top of OpenAI's hard-work and profit massively from it and are now having second thoughts, thats better too. MSFT has mostly launched meh products on top of AI.
- zombiwoof 2y agoOnce companies start charging and those paying now like 200 a month realize it isn’t as game changing as Silicon Valley wants you to believe the AI car is going over the cliff , driven by its AI Agent of course