Prelude to the burst of the AI bubble? Report: Microsoft halts multiple global data center projects

Microsoft suddenly scaled back its data center projects globally, with several important projects being paused or delayed from Indonesia to Chicago, raising market concerns about the demand for AI services.

According to a report by Bloomberg on Thursday, Microsoft has paused or delayed data center projects in multiple regions worldwide, including Indonesia, the UK, Australia, and the US states of Illinois, North Dakota, and Wisconsin. These projects have either stopped negotiations or have been delayed in development. Microsoft acknowledged that it has adjusted its data center plans, emphasizing strategic flexibility, but did not provide specific details on the affected projects.

It remains unclear to what extent the company's reduction in data centers reflects expectations of declining demand or challenges in construction, such as shortages of power and building materials.

Some investors interpret these signs of contraction as an indication that the anticipated purchasing volume for AI services does not justify Microsoft's massive spending on data centers. In recent weeks, this concern has weighed on global tech stocks, particularly under the shadow of Trump-era tariffs, with the Magnificent Seven experiencing declines, and Microsoft's stock price has fallen over 9% this year. On Thursday, pre-market trading saw Microsoft's stock price drop nearly 2.5%.

A previous article by Jiemian pointed out that TD Cowen analysts stated that Microsoft has abandoned new data center projects in the US and Europe, which were originally planned to consume 2 gigawatts of power. Analysts attribute this move to an oversupply of computing clusters supporting AI operations. They also noted that the latest actions reflect Microsoft's abandonment of some new business ventures with OpenAI. Alibaba Group Chairman Joseph Tsai also warned that the construction of AI data centers by American companies may be forming a bubble, raising concerns about the hundreds of billions of dollars in AI investments by global tech giants.

Investors are closely monitoring Microsoft's spending plans to gauge long-term customer demand for cloud computing and AI services. As a recognized leader in the commercialization of AI services (largely due to its close collaboration with OpenAI), Microsoft's strategic adjustments are often seen as a barometer for industry development trends.

Microsoft acknowledged that it has adjusted its data center plans but declined to discuss the specifics of most projects. A company spokesperson stated:

We plan data center capacity needs years in advance to ensure we have sufficient infrastructure in the right places. As AI demand continues to grow and our data center footprint expands, the changes we are making demonstrate strategic flexibility.

Is this official statement an attempt to reassure the market, or does it conceal deeper demand issues? As the AI frenzy shifts from enthusiasm to pragmatism, it is essential to closely observe the actual investment behaviors of tech giants rather than merely trusting their public relations statements