Microsoft has reportedly paused or scaled back multiple data centre projects across several continents while maintaining its commitment to invest over $80 billion in AI infrastructure during the 2025 fiscal year.
The adjustments affect developments in regions including the UK, Australia, Indonesia, and several U.S. states, with analysts attributing the moves to evolving demand forecasts and logistical challenges such as power shortages and material scarcities.
The tech giant has exited leases and delayed construction equivalent to 2 gigawatts of power capacity, according to industry analysts, impacting sites near London and in the Chicago area.
In Indonesia, work on a Jakarta-based campus has been temporarily halted, though plans for its Indonesia Central cloud region remain on track for a mid-2025 launch. Meanwhile, Microsoft confirmed ongoing development at its $1 billion site in Mount Pleasant, Wisconsin, despite deferring certain expansions.
While reaffirming its $80 billion capital expenditure target for AI-optimised data centres, the company has shifted focus toward upgrading existing facilities with advanced servers rather than prioritising new construction. Financial experts suggest the pullback reflects concerns about potential oversupply, with reports indicating rivals like Google and Meta have absorbed some of the vacated capacity in Europe and North America.
The strategic recalibration coincides with industry shifts, including OpenAI’s reduced reliance on Microsoft’s cloud infrastructure following its $500 billion Stargate initiative. Alibaba’s executive vice chair, Joe Tsai, recently cautioned against speculative data centre construction linked to AI hype, describing early signs of a potential market bubble. Microsoft executives, however, defend the spending as essential to maintaining competitiveness, particularly against emerging lower-cost AI models from Chinese firms.
Moreover, Microsoft emphasised “the flexibility of [its] strategy,” while reiterating plans to allocate more than $80 billion of its cash to capital expenditures in 2025.
The developments come amid fluctuating market reactions, with Microsoft shares dipping 1.3% following reports of the 2-gigawatt capacity withdrawal. The company maintains its position as a leader in AI infrastructure, balancing strategic retrenchment with record investment in next-generation computing hardware.