Microsoft Halts Data Center Expansions Due To Semiconductor Tariff Concerns, AI Overcapacity Fears

Microsoft Corp MSFT has paused discussions and postponed the development of sites in Indonesia, the U.K., Australia, Illinois, North Dakota and Wisconsin, Bloomberg reported, citing unnamed sources familiar with the matter. The stock is trading lower on Friday amid President Donald Trump’s semiconductor tariff announcements.

Microsoft recently dumped negotiations to lease space between London and Cambridge to host advanced NVIDIA Corp NVDA chips, Bloomberg cited unnamed sources familiar with the matter.

Also Read: Microsoft Plans Proprietary AI To Power Business Software And Reduce OpenAI Dependence: Report

The company has also halted negotiations for data center space near Chicago.

Microsoft recently ditched a proposal to obtain more cloud-computing capacity from CoreWeave, its CEO Michael Intrator, told Bloomberg.

Microsoft has paused work on parts of a data center campus near Jakarta.

Microsoft has also postponed its planned expansion at a Mount Pleasant, Wisconsin, site.

Microsoft has postponed negotiations, including a deal for a server farm complex in North Dakota with Applied Digital Corp APLD and Ada Infrastructure’s Docklands data center in London.

A Microsoft spokesperson told Bloomberg that Microsoft’s $3.3 billion project in Wisconsin will likely come online in 2026. A company spokesperson in Jakarta told Bloomberg that Microsoft’s planned Indonesia Central cloud region is on track to go live in the second quarter of 2025.

In March, TD Cowen analysts told Bloomberg that Microsoft postponed new data center projects in the U.S. and Europe, signaling potential AI computing overcapacity.

In February, the analysts highlighted leases Microsoft had abandoned in the U.S. They described the latest move as the company’s choice to forgo some new business from ChatGPT maker OpenAI.

TD Cowen’s supply chain checks indicated Microsoft’s pullback has led to Alphabet Inc.’s GOOG GOOGL Google and Meta Platforms Inc. META to backfill the capacity in international markets.

Chinese upstart DeepSeeks’s open-source AI model led to Wall Street questioning the sustainability of Microsoft, Meta and Amazon.com Inc.’s AMZN capex outlays on AI models.

Microsoft stock is down 11% year-to-date. Reportedly, SoftBank SFTBY SFTBF may become OpenAI's top backer, surpassing Microsoft's $14 billion stake.

MSFT Price Action: MSFT stock was down 2.17% at $365 premarket Friday at publication.

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