Microsoft Pulls Back From More Data Centers in US and Europe, TD Cowen finds 

In a recent update on Microsoft’s data centers in the US and Europe, the company pulls back from more leases. According to Reuters, TD Cowen analysts find that the global tech giant abandoned data center projects set to use 2 gigawatts of electricity in the US and Europe. This decision is taken considering the last six months data that showed an oversupply relative to its current demand forecast. 

On 26 March Business Insider reported that 

“TD Cowen analysts led by Michael Elias tell investors that the firm’s channel checks at Nvidia’s (NVDA) GTC event and DCD Connect indicate aggregate data center demand has increased year-over-year, despite more pervasive lease cancellations and deferrals by Microsoft (MSFT) than initially thought.” 

Microsoft is not to support OpenAI

The news agency reported that Microsoft made this paramount decision to not support additional training workloads from OpenAI, which is heavily investing in ChatGPT. The company had backed OpenAI with around a $13 billion investment. 

Earlier this year, the two companies announced

that they had altered their multi-year agreement, and now OpenAI could use cloud computing services from other companies. 

DeepSeek Competing ChatGPT

Since DeepSeek challenged OpenAI over manufacturing cost, there has been constant speculation among US tech investors over high investment on this emerging technology. 

On January 27, US stock market witnessed a major drop of 17% in Nvidia’s stock when the Chinese company said it had built its model using Nvidia’s less-advanced H8oo chips, and only 2,788 GPUs, compared to OpenAI’s 10,000 GPUs for ChatGPT. 

Alphabet and Meta Stepping in 

TD Cowen analysts find that their supply chain checks indicate that Microsoft’s pullback has led to Alphabet’s Google stepping in to backfill the capacity in international markets. The analysts also find that Meta Platforms are also doing the same in the US. 

Notably, Alphabet and Meta announced to spend $75 billion and $65 billion respectively on their AI buildout this year. 

The new findings by TD Cowen indicate a major shift in Microsoft investment. For now the pull back may create a major dent in the US and European market, creating an opportunity for other tech investors. However, this withdrawal may also raise speculations among investors over lofty investment on AI projects that could be done at less cost by Chinese companies.