Microsoft stock slips after analysts say it canceled 2 data center leases in the US, suggesting potential 'oversupply position'

Core Viewpoint - Microsoft has canceled leases for some US data centers, indicating potential lower demand for AI than previously expected, leading to a slight decline in its stock price [1][7]. Group 1: Data Center Operations - Analysts from TD Cowen reported that Microsoft has canceled leases in the US totaling "a couple of hundred MWs" with at least two private data center operators [2]. - The company has also pulled back on converting Statements of Qualifications (SOQs) to leases and reallocated a significant portion of its international spending to the US [2][3]. - These actions suggest a potential oversupply of data center capacity relative to Microsoft's new forecasts [3]. Group 2: Market Dynamics - The analysts noted a shift in incremental OpenAI workloads to Oracle and SoftBank, with a significant increase in Oracle's requirements over the past three months [4]. - Microsoft is still active in the data center market, but its current demand is lower compared to the rapid leasing pace observed in 2023 and the first half of 2024 [5]. - Microsoft plans to invest $80 billion in AI data centers this fiscal year, despite the recent adjustments in leasing [5][6]. Group 3: Company Statements - A Microsoft spokesperson stated that their spending remains on track to meet customer demand, emphasizing that they are well-positioned due to significant past investments [6]. - CEO Satya Nadella highlighted the importance of aligning supply and demand in the AI sector, cautioning against overhyping supply without understanding customer value [8]. Group 4: Market Observations - Wall Street is closely monitoring Nvidia's upcoming earnings release for indications of softening AI spending, which could impact the broader market [9].