Microsoft pulls back on data centres across the world

MICROSOFT HAS PULLED back on data centre 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.

- Brody Ford, Dawn Lim, Olivia Solon & Faris Mokhtar April 3

The software firm 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 commercialising AI services, largely thanks to its close tie-up 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 firm's data centre pull-back 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 centre budgets.