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Microsoft Pulls Back on Data Centers From Chicago To Jakarta

(Thursday April 03, 2025 @11:27AM (msmash) from the closer-look dept.)


Microsoft has [1]pulled back on data center projects around the world, suggesting the company is taking a harder look at its plans to build the server farms powering artificial intelligence and the cloud. From a report:

> The software company has recently halted talks for, or delayed development of, sites in Indonesia, the UK, Australia, Illinois, North Dakota and Wisconsin, according to people familiar with the situation. Microsoft is widely seen as a leader in commercializing AI services, largely thanks to its close partnership with OpenAI. Investors closely track Microsoft's spending plans to get a sense of long-term customer demand for cloud and AI services.

>

> It's hard to know how much of the company's data center pullback reflects expectations of diminished demand versus temporary construction challenges, such as shortages of power and building materials. Some investors have interpreted signs of retrenchment as an indication that projected purchases of AI services don't justify Microsoft's massive outlays on server farms. Those concerns have weighed on global tech stocks in recent weeks, particularly chipmakers like Nvidia which suck up a significant share of data center budgets.



[1] https://www.msn.com/en-us/money/other/microsoft-pulls-back-on-data-centers-from-chicago-to-jakarta/ar-AA1CdljN



When a recession is expected, companies pull back (Score:4, Insightful)

by Targon ( 17348 )

With the latest tariff announcements, every business is now preparing for a recession or worse. That means, projects planned due to expected growth are put on hold or cancelled.

Re: (Score:3)

by evanh ( 627108 )

I wish I could argue the AI bubble is about to pop. But you're probably right, it's just the beginnings of Trump fallout instead.

Re: (Score:2)

by nightflameauto ( 6607976 )

> I wish I could argue the AI bubble is about to pop. But you're probably right, it's just the beginnings of Trump fallout instead.

If both slam into us at the same time, it could be a fun couple years watching all our financial systems melt into a puddle of goo.

Re: It's not a recession. It's AI. (Score:2)

by databasecowgirl ( 5241735 )

It's not an economic downturn. Obviously AI is replacing data centers. It's time to double down on the AI bet.

Just look at what AI has done to every industry from bicycles to building homes. It's not just the tech sector. All industries are seeing layoffs as these jobs are replaced by AI.

Re: (Score:2)

by aaarrrgggh ( 9205 )

This move by Microsoft was telegraphed about a month ago at least. My guess is that infrastructure costs are causing a bit of a reset, especially after Deepseek. They usually think longer-term than a recession, although setting contract terms before the recession hits is nice to avoid.

Re: (Score:2)

by Targon ( 17348 )

The people at Microsoft have known it would happen, but predicting WHEN has been the problem.

China's DeepSeek Efficiency? (Score:2)

by Gilmoure ( 18428 )

I wonder if they took at look at how efficient China's DeepSeek training is, and are maybe reevaluating their hardware requirements going forward?

Re: (Score:2)

by dstwins ( 167742 )

That and also the actual demand.. right now, companies are still dipping their toes in the AI waters so its not like EVERY company and person is requesting AI capable VM/Infrastructure.. Which means its the classic demand vs. supply (read: cost). in a healthy economy, they could float some on the "if you build it they will come" plan.. but in a global recession that's right around the corner (thanks Cheato).. everyone is pulling back, curtailing major spending, and playing a wait and see approach before spe

Re: China's DeepSeek Efficiency? (Score:2)

by reanjr ( 588767 )

This has been a while coming. As a shareholder of MSFT, I follow their press releases pretty closely. What I've seen is about a year of pulling back from their OpenAI investment and making moves to monetize an overcapacity of servers.

Hence the crackdowns on Windows 11 (Score:2)

by xack ( 5304745 )

Got to keep the MS account sign up rates high so onedrive can keep sucking up data. Microsoft will make their data center money back through selling the telemetry to AI companies.

Satya's words put into action (Score:2)

by michaelmalak ( 91262 )

[1]Microsoft CEO Admits That AI Is Generating Basically No Value [futurism.com]

[1] https://futurism.com/microsoft-ceo-ai-generating-no-value

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