Cancel Microsoft's data center lease:

TD Cowen Report Summary (Feb. 21, 2025)

Cancel Microsoft's data center lease:

Microsoft (MSFT) has canceled data center leases worth around a few hundred MW in the United States, according to TD Cowen's channel check. The leases involve at least two private data center operators, and in some situations appear to have ended the contracts, citing facility and power delays.
Additionally, MSFT has been shown to have delayed or canceled the transition from a Statement of Qualifications (SOQ) to a lease agreement.
MSFT is reallocating internationally scheduled spending to the U.S., suggesting a slowdown in international data center leasing activity.
Reason:

The main reason for this change seems to be the possibility that MSFT is in oversupply. MSFT has been shown to have abandoned contracts worth 100MW or more in several markets, or has expired letters of intent (LOI) over 1GW. In addition, it has abandoned five or more land contracts in several Tier 1 markets.
The decision could indicate the loss of a key demand signal that MSFT was originally about to respond to, potentially leading to changes in demand related to OpenAI. MSFT was the most active data center renter during 2023 and the first half of 2024, but it is now likely to have overcapacity than predicted.
Conclusion:

MSFT is looking to forecast and adjust data center capacity to match its OpenAI workload, which may have gained excess capacity in some areas, a change that reflects the company's forecast and is expected to affect its future data center construction and leasing strategy.