--- title: "Microsoft Backing Out of Expensive New Data Centers After Its CEO Expressed Doubt About AI Value" description: "After its CEO expressed hesitancy about AI's real-world value, Microsoft is backing out of the construction of new data centers." date: "2025-02-24" modified: "2025-02-24" authors: - name: "Victor Tangermann" job_title: "Senior Editor" link: "https://futurism.com/authors/victor" url: "https://futurism.com/microsoft-ceo-hesitation-ai-expensive-data-centers" categories: - "Artificial Intelligence" tags: - "artificial intelligence" - "generative ai" - "microsoft" - "satya nadella" --- # Microsoft Backing Out of Expensive New Data Centers After Its CEO Expressed Doubt About AI Value ![]() *\Image: Getty / Futurism\* Last week, Microsoft CEO Satya Nadella [made an eyebrow-raising appearance]() on a podcast dismissing the hype around claims of having achieved "some \[artificial general intelligence\] milestone" as "nonsensical benchmark hacking." Most strikingly, Nadella admitted that AI simply hasn't generated much value so far, arguing that economic growth due to the tech would be a much more compelling demonstration of AI's actual accomplishments. It was an unusually muted response given the tens of billions of dollars the tech giant has poured, and is planning to pour, into the development of AI and the infrastructure to support it — despite real-world applications for the tech remaining few and far between. Is Nadella worried about a [looming dot-com-like bubble]() that's set to burst? Was the emergence of Chinese AI startup DeepSeek's hyper-efficient reasoning AI model, which [shook up the entire industry last month](), an early warning shot? Now, investment banking company TD Cowen has [informed *Bloomberg*]() that Microsoft has canceled some leases for the buildout of its US data center capacity, further bolstering the possibility that the company is realizing it was overzealous in its plans to invest in the tech. While it's too early to draw any definitive lines between Nadella's comments last week and the latest developments, it's certainly looking like some of the major players in the AI space are increasingly worried about overleveraging themselves. "The canary just died," one [Bluesky user wrote]() in response to the news. "While we have yet to get the level of color via our channel checks that we would like into why this is occurring, our initial reaction is that this is tied to Microsoft potentially being in an oversupply position," TD Cowen analysts wrote in a note, as quoted by *Bloomberg*. Microsoft subsequently confirmed to *Bloomberg* that it was still [committed to spending some $80 billion]() on AI infrastructure worldwide, but declined to comment on the news that it was canceling leases. "While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions," a spokesperson told the publication. It's also entirely possible that there could be a more mundane, business-based explanation. In a separate report, TD Cowen suggested that Microsoft was canceling the leases as OpenAI is significantly shifting its spending [from Microsoft to SoftBank]() as part of president Donald Trump's massive, $500 billion Stargate AI infrastructure project. "To me this all looks and sounds like business as usual," Mizuho Securities analyst Jordan Klein wrote in a note, as quoted by *Bloomberg*. "A company this large and with $80 billion of annual spend has the right to move in and out of data center leases, many of which were never officially signed." Other companies, like Google owner [Alphabet](), [Amazon](), and [Meta]() have pledged to spend their own fortunes building AI infrastructure. Alphabet boosted its AI investments to a [whopping $75 billion over the weekend](), showing there's still plenty of hype out there. Even if Microsoft's latest actions were a sign of "business as usual," the optics alone aren't great. Any news that would undermine those sky-high ambitions or signal that the tech may never turn a profit could play into fears of a bubble. And considering the chaos DeepSeek caused, investors are already jittery. Given AI's [very real struggles]() to make money, it's hard not to read into the drama. During his podcast appearance last week, Nadella told Patel that "at some point, the supply and demand have to map." "You can go off the rails completely when you are hyping yourself with the supply-side, versus really understanding how to translate that into real value to customers," he added. **More on Microsoft:** *[Microsoft CEO Admits That AI Is Generating Basically No Value]()* ## Author I've been at Futurism since 2017, where my role has evolved to encompass design, writing, and increasingly editing. I've always been fascinated by space exploration and advanced transportation, which I've leaned into by interviewing luminaries in those fields while closely following the dimensions of policy and regulation that allow next-generation projects to succeed -- or, sometimes, to fail. I'm also keenly interested in the effects of generative AI on society, policies, and democratic institutions, as well as clean energy, physics and biology, and the vagaries of tech leadership. My work for Futurism has been cited by publications including Ars Technica, Gizmodo, PC Magazine, Jalopnik, Fox News, and the New York Post. I spent my childhood living in locations including Manila, the Philippines, and Geneva, Switzerland, attended McGill University, and now live in Toronto, Canada. Before Futurism I worked at AskMen and a small photography studio. In my free time, I'm an avid gardener, foodie, and craft beer lover, as well as a maker of artisanal hot pepper sauces. I have a magnificent dog named Freida. ### Author social links [Bluesky]()