Microsoft abandons data centre projects in US and Europe, sparking oversupply fears

The analysts, who rattled investors with a February note highlighting leases Microsoft had abandoned in the US, said the latest move also reflected the company’s choice to forgo some new business from ChatGPT maker OpenAI, which it has backed with some US$13 billion.

Microsoft and the start-up earlier this year said they had altered their multi-year agreement, letting OpenAI use cloud-computing services from other companies, provided Microsoft did not want the business itself.

Microsoft’s retrenchment in the last six months included lease cancellations and deferrals, the TD Cowen analysts said in their latest research note, dated Wednesday. Alphabet’s Google had stepped in to grab some leases Microsoft abandoned in Europe, the analysts wrote, while Meta Platforms had scooped up some of the freed capacity in Europe.

“Thanks to the significant investments we have made up to this point, we are well positioned to meet our current and increasing customer demand,” a Microsoft representative said in a statement, adding that the company last year added more capacity than in any other year in its history.