| | | AI infrastructure stocks fall as Microsoft scraps some data center plans
Mar. 26, 2025 1:53 PM ET
By: Brandon Evans, SA News Editor
Stocks tied to artificial intelligence infrastructure fell during Wednesday trading, after TD Cowen released a report showing Microsoft (NASDAQ: MSFT) was scaling back some of its data center plans.
Microsoft has backed out of data center projects slated to use more than two gigawatts of electricity in the U.S. and Europe over the past six months, according to an investor note by TD Cowen.
"In our view, the pullback on new capacity leasing by Microsoft was largely driven by the decision to not support incremental Open AI training workloads," said TD Cowen analyst Michael Elias. "However, we continue to believe the lease cancellations and deferrals of capacity points to data center oversupply relative to its current demand forecast. As such, we believe the lease deferrals are intended to provide Microsoft with a medium-term runway of capacity in major markets to support cloud/inference workloads, with Microsoft canceling leases for capacity that exceeds its updated medium-term capacity needs."
Super Micro Computer (NASDAQ: SMCI) led the sector south, as shares were down more than 8% by afternoon trading. Nvidia (NASDAQ: NVDA) shares had dropped 6%. Broadcom (NASDAQ: AVGO) was down 5%. Advanced Micro Devices (NASDAQ: AMD) had declined 4.5%. Micron Technology shares had slid 3%.
Hyperscalers also saw declines, with Google ( GOOG)( GOOGL) dipping 2.5%, while Amazon ( AMZN) and Meta Platforms ( META) both edged 2% lower.
TD Cowen also noted that its channel checks showed a slowdown in the ordering of data center equipment in January. However, the financial services firm indicated some of the slowdown is due to hyperscalers redesigning some data centers to support higher rack densities. |
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