Is there “overinvestment in AI computing power” in the United States?

An analyst report recently released by US investment bank TD Cowen showed that Microsoft is slowing down the leasing of data center capacity. This news has caused widespread discussion in the market. Reuters reported on the 25th that this has further exacerbated investor concerns that the stock market boom led by artificial intelligence (AI) may lose momentum. However, some analysts believe that this news is only a modest revision of the industry’s recent growth forecast. Microsoft issued a statement on Monday local time, saying, “While we may strategically adjust or slow down infrastructure construction in some areas, we will continue to maintain strong growth in all regions.

“Oversupply” raises concerns TD Cowen’s report shows that Microsoft has canceled lease agreements with at least two private data center operators totaling “several hundred megawatts”, while also suspending the conversion of negotiated and signed qualification statements into formal leases. In addition, Microsoft has also reallocated a large amount of its spending budget originally planned for international markets to the United States, indicating that its international leasing activity has slowed. TD Cowen analysts wrote in a report: “While we have not yet understood through channel checks why this is happening, our initial reaction is that this is related to Microsoft possibly being in a state of oversupply. While Microsoft’s stock price was barely affected, related companies were hit. Shares of Germany’s Siemens Energy and France’s Schneider Electric fell 7% and 4% respectively on Monday. U.S. utility companies Constellation Energy and Vistra, which provide power to data centers, fell 5.9% and 5.1% respectively. Data center operator Applied Digital fell 15%. In addition to building data centers for its own use and for customers to use through Microsoft’s Azure public cloud, Microsoft also leases data center capacity through private providers such as CoreWeave.The company previously said it expected to invest $80 billion in AI data centers this fiscal year. During an earnings call in late January, Microsoft CEO Satya Nadella said the company must maintain spending to meet “exponential growth in demand.” Mark Modell, an analyst at the US investment bank Bernstein, said that in the context of the recent poor financial performance of major cloud computing companies, this news may indicate a decline in demand. Reuters reported that investors are increasingly skeptical of the huge investments by U.S. technology companies in artificial intelligence infrastructure because of slow returns, while the breakthrough progress of Chinese start-up DeepSeek has demonstrated artificial intelligence technology that costs far less than Western competitors. The US$80 billion plan is still ongoing. The US “Fortune” magazine reported that Microsoft reiterated its expenditure target for the fiscal year ending in June in the statement, but refused to comment on TD Cowen’s report.A company spokesman said: “Although we may strategically adjust or slow down infrastructure construction in some areas, we will continue to maintain strong growth in all regions. Our plan to invest more than $80 billion in infrastructure this fiscal year is still on schedule and will continue to grow at a record rate to meet customer demand.” Microsoft’s reduction of data centers has been interpreted by many industry insiders as an early warning of “oversupply” of AI computing power, but some analysts believe this move is normal. Bloomberg quoted Mizuho Securities analyst Klein as saying on the 25th that such adjustments are common among large technology companies. “This looks more like normal business operations.” Klein wrote in the report. “For a large company with an annual investment of $80 billion, it is a normal strategy to adjust some data center leases.” Modell said that Microsoft has faced huge demand and once had difficulty finding suitable capacity. Management may have to lease data centers and GPU computing resources at a premium and sign agreements for more future capacity than actually needed. Ray Ford, global chief investment analyst at Lazard, an American investment bank, said: “Microsoft’s strategic change may reflect a more conservative direction of data center expansion.Other analysts believe that Microsoft’s strategic adjustment may be related to its partnership with OpenAI. Microsoft has previously aggressively expanded its data centers to meet OpenAI’s computing power needs. In a second report on Monday, TD Cowen speculated that OpenAI is moving some workloads from Microsoft to another technology giant Oracle, a plan that may cause Microsoft to adjust its data center expansion strategy. “The scale of the data center boom is bound to be adjusted.” The US “Business Insider” website quoted S&P Global Data Center Industry Analyst Thompson on the 26th as saying that the scale of the data center boom is bound to be adjusted because the forecast includes speculative projects and the possibility of double counting of tenants expressing the same demand in multiple projects or regions.”Some of these projects are not going to get built,” Thompson said. “I don’t think that’s a reflection on the data center industry as a whole.” S&P Global forecasts that the industry’s capacity will grow from about 35.4 gigawatts today to nearly 82 gigawatts by the end of the decade, a 131% increase. More ambitious forecasts see more than 90 gigawatts of data centers coming online by 2029. In recent weeks, major companies including Amazon, Alphabet and Meta have continued to invest in cloud services and AI infrastructure. According to a report by technology news media “The Information” on the 26th, Meta is discussing the construction of a new data center park for its artificial intelligence project, with potential costs that may exceed US$200 billion. According to the report, Meta executives have told data center developers that the company is considering building campuses in places such as Louisiana, Wyoming or Texas, and senior leaders have inspected potential sites this month.