• Microsoft has begun canceling leases for a significant amount of data center capacity in the U.S., totaling a couple of hundred megawatts. This decision reflects growing concerns about whether the company is over-investing in AI computing infrastructure amid a cautious outlook on long-term AI demand. Analysts from TD Cowen noted that Microsoft has also halted the conversion of agreements that typically lead to formal leases, a strategy previously employed by competitors like Meta Platforms when they reduced capital expenditures.

• The cancellation of these leases comes as Wall Street questions the sustainability of AI demand, despite Microsoft's commitment of $80 billion towards computing capacity. This move could signal a shift in strategy for Microsoft, as it reassesses its investments in AI infrastructure in light of fluctuating market conditions. The broader industry is experiencing a surge in demand for data center infrastructure driven by AI, but Microsoft's actions may indicate a more cautious approach compared to its competitors, potentially impacting its market position.