Microsoft Corp. has canceled some leases for US data center capacity, according to TD Cowen, raising broader concerns over whether it’s securing more AI computing capacity than it needs in the long term.

It is being reported that Microsoft has recently canceled several data center leases in the U.S., prompting concerns about its long-term AI infrastructure strategy. According to TD Cowen, the tech giant voided agreements amounting to "a couple of hundred megawatts" of capacity, roughly equivalent to two large data centers.

Microsoft's decision to forgo renewing some data center leases has raised questions about a potential oversupply of AI computing power, despite the company maintaining its planned US$80 billion capital expenditure.

TD Cowen noticed Microsoft doing something strange on Friday. The Open AI partner and tech giant appeared to be cancelling data center leases. According to the market analysts, this is part of a wider pattern. TD Cowen said Microsoft had an “oversupply” problem. It’s another datapoint that points to Big Tech’s nervousness around its big bet on AI.

Microsoft (MSFT) recently canceled some data center leases, causing a drop in AI stock prices and raising concerns about AI infrastructure

Microsoft’s lease cancellations were detailed on Friday in a note from TD Cowen analysts. According to Bloomberg, the investment bank believes that Microsoft has voided contracts for data centers with about 200 megawatts in combined capacity. One megawatt corresponds to the electricity usage of several hundred households.

A growing number of companies are stepping up to provide logistical help in developing data centers for AI.

Microsoft is reportedly scaling back its data center footprint, canceling leases with several providers. This significant decision affects a total capacity of a “couple hundred megawatts,” equivalent to about two data centers.

Medina County is continuing to feel rapid growth, with seven more data centers on the way. Microsoft is building a nearly $500 Million data center.